Travis Perkins moves for BSS takeover with £533m bid

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Unusually, shares in both the bidder and its target soared on the news as investors in both companies welcomed the deal.

BSS shares rose 111p, or 34%, to 436p, while Travis Perkins gained 70½p, or 9.5%, to 815½p.

"This is a truly great deal for us," said Geoff Cooper, chief executive of Travis Perkins. "When you combine our existing plumbing and heating business with BSS you get really big scale."

Analysts suggested that the deal would take Travis Perkins from a share of 17% of the UK plumbing market to around 25%.

Cooper acknowledged that it could trigger an investigation by the Office of Fair Trading, but believes there are no serious competition worries.

The Travis Perkins boss said: "These things are measured in terms of local market catchment areas, and with five big players in the market there will be no shortage of competition."

Cooper has already talked to some of BSS's biggest investors like BlackRock, Schroders, AXA and Legal & General, and has received tacit backing for the bid from many of them.

BSS said on that basis it would recommend the bid. The offer is a mix of cash and Travis Perkins shares which values each BSS share at 445.5p.

City analysts said there was still a reasonably high chance that a rival bidder could emerge for BSS, but Cooper claimed that Travis Perkins made "by far the best fit".

He said that the major reason behind the company's bid was to achieve a size in plumbing and heating which not only gave it a large share of the UK market, but also increased its buying power.

Cooper said: "When you go to a factory in China you cannot just order a couple of cartons of central heating pumps, you need to be ordering a container load or two to get the best prices."

COMPANY PROFILES

Travis Perkins trades from 1200 sites across the UK and employs 17,000 people. In 2009, its revenues fell by 8% to £2.93 billion and headline pre-tax profits were down 20% at £180 million. But a trading statement earlier this month talked of a strong rebound with sales up 2.2%.

BSS (formed as British Steam Specialities in 1899) employs almost 500 people in 439 branches across the UK. It this week reported a 24% slide in profits to £44.2 million, but has seen a recent strong upswing. BSS is the second-largest UK plumbing and heating player after Wolseley.