Ferguson pulls trigger on Wolseley split in wake of Nelson Peltz's Trian push

Ferguson will hive off Wolseley as a new company on the FTSE 250

3 September 2019

Plumbing giant Ferguson will spin off historic UK division Wolseley and appoint a new chief executive weeks after Wall Street billionaire activist Nelson Peltz took a major stake.

The FTSE 100 firm, which makes most of its sales in the US, took some shareholders by surprise by unveiling the break-up plan sooner than expected.

Ferguson will hive off Wolseley as a new company on the FTSE 250 with its own board at an estimated value of £600 million.

The remaining firm will stay listed on the FTSE 100 as a US-focused supplier selling plumbing and heating equipment.

The accelerated spin-off, said to have been in the works pre-Peltz, will see US head Kevin Murphy lead the newly minted firm.

He replaces UK-based boss John Martin, who leaves in November.

The move could open the door for the FTSE 100 giant to move its listing to the US, the first FTSE 100 firm to do so since Invesco went Stateside in 2007.

“The debate over shifting the listing to the US is likely to come to the fore again,” said Jefferies analysts.

The three-pronged overhaul comes 12 weeks after Trian Investors, the vehicle run by Peltz and co-founders Peter May and Ed Garden, unveiled a £736 million, 5.9% share stake in Ferguson.

Trian, which declined to comment today, said the company was trading at a discount to US rivals and wanted to “explore and implement” initiatives to boost the share price.

Peltz is well-known for his full throttle approach to corporate shake-ups, waging campaigns against massive conglomerates such as Heinz, Cadbury, Kraft Foods, DuPont, Pepsi and State Street.

Departing chief Martin, 53, denied the shake-up was triggered by Trian and said it was a “coincidence”.

“We have had the demerger of the UK on the agenda for a long time. It won’t come as any surprise for shareholders, it’s coincidence of timing,” he said.

“The succession follows that. When the main business is totally focused on America it is appropriate for the business to be managed by someone focused in north America.”

One Ferguson shareholder said the company was responding faster to Trian’s overtures than expected and they were surprised Martin was standing down after only three years.

Martin said it was the right thing to do. Wolseley UK will be led by current managing director Mark Higson.

Ferguson pulls trigger on Wolseley split in wake of Nelson Peltz's Trian push

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