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Duke, Apax sell Wickes, keep Focus

Duke Street Capital is to receive £155m in cash from the £950m sale of UK DIY retailer Wickes to trade buyer Travis Perkins.

Private equity groups Duke Street Capital and Apax Partners have agreed to sell UK DIY retailer Wickes to Travis Perkins, a London-listed trade buyer. Travis is to pay £950 million (€1.37 billion, $1.85 billion) in cash for the business.

Wickes is part of Focus Wickes Group, the second-biggest DIY retail operation in the UK which Duke Street was instrumental in building up over the course of the past 17 years. Wickes has 172 stores across the country and annual sales in excess of £900 million.

Proceeds from the sale will be used in part to repay debt, Focus Wickes said in a statement. The balance will be distributed among shareholders including the private equity firms.

Duke Street and Apax are not selling the Focus part of the operation. Focus has 256 stores and over £800 million in annual sales. Duke Street chairman Edmund Truell said  Focus was expected to grow profits strongly over the next two to three years.

Duke Street first invested in Focus in 1987, which at the time had six outlets. Afterwards the group repeatedly injected capital to grow the business through a series of acquisitions. In 2000, Duke Street backed Focus chief Bill Archer in the hostile takeover of Wickes, then a listed entity with 131 stores. In 2002, Duke Street sold a 29 percent stake in Focus Wickes to Apax for £120 million after shelving plans for an IPO earlier that year.

According to Truell, Duke Street stands to pocket £155 million from the latest deal, which is subject to shareholder and regulatory approval. “It has been a long road, and it is enormously pleasing to crystallise a profit from Wickes after we went out on a limb with a hostile buy and build”, Truell said in an interview. “I remember very well holding £100m worth of Wickes shares when the outcome of our bid was still uncertain.”

Truell said Duke Street and Apax had considered a variety of options for Focus Wickes prior to agreeing a partial sale to Travis, which at no point of the sales process had been given exclusivity status. A number of trade and financial buyers had offered to buy all or parts of the group, whilst several banks had offered financing to recapitalise the group. Focus Wickes was advised by Goldman Sachs.

A leveraged recapitalisation might in fact be the next step for Focus, Truell indicated, once the Wickes disposal was completed. Duke Street retains a 57 percent interest in Focus.