Shares in building materials distributor Travis Perkins (TPK) gained 0.5% to £16.98 after the company confirmed the long-awaited sale of its Plumbing & Heating business and the return of capital to shareholders.
The sale of the unit to an affiliate of US private equity firm HIG Capital for £325 million is expected to complete at the end of this month, after which Travis Perkins will launch a £100 million initial buyback programme.
In addition, the firm will pay a special dividend of £79 million or 35p per share to investors on the register at the close of business on 1 October.
The sale represents the second phase of Travis’s transformation into a pure trade-focused building materials and equipment merchant, following the demerger and flotation of the Wickes (WIX) retail business.
Last month the company posted a robust set of first half results, with revenues up 44% on a like-for-like basis to £2.3 billion thanks to the continued strength of the UK repair, maintenance and improvement market.
The firm also raised its operating profit guidance for the full year to at least £310 million in its continuing businesses, up from June’s guidance of at least £300 million.
On 29 September the company is holding an investor day where it will outline its growth proposition, including the expansion of the Toolstation brand in the UK and in Europe, and its future capital allocation strategy.