Bathroom distributors Frontline and Smiths Briten have been sold by the Grafton Group, as part of its decision to divest its traditional merchanting business, to independent builders’ merchants Huws Gray.

The deal for the merchanting business, which also includes Bathroom Distribution Group, Buildbase, PDM Buildbase, Civils & Lintels, The Timber Group and NDI brands was for £520million.

In the year to 31 December 2020, this division reported revenue of £828.2 million (2019: £1.02 billion) and adjusted operating profit of £18.8 million (2019: £33.3 million). Gross assets at 31 December 2020 were £497.2 million.

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Grafton will retain freehold properties with development potential that have a market value of circa £25 million.

This agreement follows the announcement in April 2021 of a strategic review of the business.

Huws Gray will be notifying the transaction to the Competition and Markets Authority (“CMA”).

The divestment is expected to close by the end of the first quarter of 2022 and completion is not conditional on the outcome of the CMA process.

The decision to divest followed a strategic review of the business which concluded exiting this segment of the building materials distribution market would enable the Group to optimise shareholder value.

Grafton will continue to develop its Selco Builders Warehouse branch network and other specialist distribution and manufacturing businesses in Great Britain.

Completion of this transaction will also enable the Group to focus on its international development strategy.

Commenting on the divestment, Gavin Slark, Chief Executive Officer of Grafton said: “The divestment secures future opportunities for all stakeholders as part of an enlarged general merchanting business.

“ I would like to thank all our colleagues in the Business for their longstanding contribution to Grafton and wish them every success in the future.

“This is an attractive outcome for Grafton and is in line with our strategy of deploying our capital resources towards higher growth potential businesses offering superior returns.”

Rothschild & Co conducted the strategic review and acted as financial advisor on the divestment.

HSBC acted as financial advisor to Huws Gray on the transaction.