On the go: UK-based heating and plumbing distribution business Wolseley is set to be freed of its defined benefit scheme liability following its acquisition by a private investment company.
The sale was agreed between Ferguson, owner of Wolseley, and private equity firm Clayton, Dubilier & Rice for a net cash consideration of $420m (£308m).
As part of the deal, the Wolseley UK business will retain no ongoing liabilities in relation to the Wolseley Group Retirement Benefits Plan, which stood at $27m on an IAS 19 basis at the end of July.
The DB scheme, which was closed to new entrants in 2009, was closed to future service accrual in 2013 when it was replaced by a defined contribution plan. In 2016, the scheme was closed for future non-inflationary salary accrual, according to Ferguson’s latest annual report.
In 2017, the scheme secured a buy-in insurance policy with Pension Insurance Corporation worth £600m. However, the deferred members of the scheme at the time were not covered by this policy, the report read.
In 2019, Ferguson offered some deferred members of the pension scheme an enhanced transfer value to settle their benefits accrued under the plan.
Excluding the DB liability, Wolseley’s net operating assets stood at $378m at the end of July. The company generated around $1.9bn in revenue for the year ending July 31 and had underlying trading profit of $8m on a pre-IFRS 16 basis.
The transaction is expected to complete later this month, with the profits intended for Ferguson shareholders by way of a special dividend.
