Wolseley plc hits the Street - Brief Article - Statistical Data Included

Home Channel News, June 18, 2001 by John Caulfield

NYSE listing may give U.S. subsidiaries even more clout NORWOOD, MASS. -- As if Carolina Holdings wasn't enough of a competitive threat already, its wherewithal to expand its ever-growing network of lumberyards may have been strengthened late last month after its parent company, London-based Wolseley plc, began trading on the New York Stock Exchange.

Raleigh, N.C.-based Carolina Holdings is currently the industry's largest pro-oriented retailer, with sales last year of $2.4 billion. On May 24, it expanded its operations to 220 locations in 24 states, and entered Massachusetts for the first time, when it acquired General Builders Supply, a two-yard dealer based in Norwood, Mass., that last year generated $37 million in sales.

Five days later, Wolseley's trading symbol, WOS, opened for the first time on the New York Stock Exchange in Manhattan at $35.50 per share. A large contingent of Wolseley executives was on hand for the event, including Richard Ireland, Charles Banks and Steve Webster, its chairman, president and chief financial officer, respectively; Carolina president and Wolseley board member Fenton Hord; Chip Hornsby, who recently took over for Banks as president of Ferguson Enterprises, the industry's largest distributor of bath fixtures; and Bob Johnson, president of Familian Northwest.

To celebrate its being listed, Wolseley parked a tractor-trailer that bore the names of its various divisions outside the entrance of the Exchange at 18 Broad Street. (The vehicle was supplied by a Springfield, N.J.-based trucking firm, North Jersey Express, the son of whose owner makes all the banners and flags for the Exchange, according to Carolina Holdings spokesman Henry Warren.) On the floor of the Exchange, the company purchased some stock and made a contribution to the Princess Diana fund in the United Kingdom.

Stock purchase option

In an interview with NHCN the day after the listing, Hord said that it was unlikely that Carolina Holdings or Ferguson Enterprises would become any more aggressive than either is already as a result of Wolseley's listing. "Generally speaking, we aren't beating the bushes because most deals come to us," Hord said.

He explained that the "major reason" for the listing was to allow Wolseley's American employees -- who now number around 22,000 -- to have easier access to ownership in the company. "We can also deliver some new benefits packages," he said. (Because it isn't issuing any new shares, Wolseley is actually trading American Depositary Receipts, or ADRs, on the New York exchange, Each ADR represents five shares that are traded in London. The company selected Bank of New York as its depositary bank, which does more ADR business than any institution in the world.)

Wolseley's listing, though, also gives Carolina the option of offering to pay for acquisitions with stock instead of cash, which is how most of its deals have been structured. "Admittedly, there haven't been that many [companies] that are looking for stock -- they want the cash -- but some might," Hord said.

Last year, Carolina Holdings was extremely busy in this arena, gobbling no fewer than five companies, including 35 unit Anderson Lumber in Utah whose annual sales hover around $300 million, and Texas based Calcasieu Lumber, one of the strongest independent pro dealers in the United States, with annual sales of more than $120 million.

In late May, Wolseley paid the equivalent of $360 million to acquire from France-based Rexel 313-branch Westburne Plumbing and Waterworks, whose sales last year in the United States and Canada were the equivalent of $930 million. Westburne's operations will eventually be incorporated into Ferguson's. Indeed, Wolseley moved Banks into its corporate suite to accelerate its growth in Europe, where it already is one of the largest building products dealers and suppliers.

Carolina's acquisition of General Builders Supply, its first in New England, brings to the company a dealer with 85 employees that can trace its roots back to 1936. General's five-acre headquarters yard in Norwood includes 50,000 square feet of storage space, and is complemented by a 20-acre facility in Lakeville, Mass., that serves multi-family and commercial accounts and will soon be home to its millwork operation.

General's name will eventually be changed to Stock Building Supply, the banner to which Carolina is converting its entire network. Rick Katz, General's president, will stay on to run this business for Carolina Holdings. Hord said that he anticipates that Katz would eventually run Carolina's regional operations in the area, a statement that implies that the pro dealer isn't finished yet with its acquisition strategy in this market. (Currently, the company's closest operations are CC Loose and Delinger Lumber in Pennsylvania.)