Jewson carve-out sees Apollo, CVC, HIG, TDR in round two

Maryna Irkliyenko , Josh O'Neill and Kezia Joseph
11 November 2022

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Saint-Gobainтs sale of Jewson, its UK supplier of timber and building materials, have seen a series of large-cap sponsor advance to the second round of bids. Apollo, CVC, HIG and TDR are among those in the auction, with binding offers coming up at the end of November, four sources familiar with the matter said.

US-based private equity firm One Rock is also in the race, according to one of the sources.

Jewson is being sold off EBITDA that varies significantly depending on adjustments and valuations applied to real estate assets within the business. The standalone pro-forma, pre-IFRS adjusted EBITDA for FY21 stands at around GBP 100m, while post-IFRS reaches GBP 164m. Adjusted EBITDA comes to circa GBP 140m, the second and the third source said. The latter includes standalone costs of GBP 24m, the add-back of group recharge costs of GBP 36m, and pro-forma adjustments of GBP 10m. In addition, the figure includes a one-off pension cost upwards adjustment of GBP 50m, added the third source.

Given that the asset has a large freehold estate, the deal value is likely to take into account property valuations and leaseback, one of the sources said. "EBITDA varies as the company has a good property portfolio so it depends how that is valued," the fourth source said.

CVC is bidding for Jewson via its portfolio company Stark Group, a Denmark-based retailer and distributor of timber and building materials. In its 3Q results, Stark announced that the company's 2Q21-22 net sales increased 26.3% YoY to EUR 1.245bn while its EBITDA post-IFRS 16 rose 61.2% to EUR 69m, as reported by Mergermarket's sister publication Debtwire.

JPMorgan is advising French construction materials giant Saint-Gobain on the sale of Jewson. In 2019, Saint-Gobain announced a strategic review of the business portfolio that would include divestments and acquisitions. The French conglomerate has recently come under pressure from hedge fund Bluebell to restructure with the sale of the building distribution operations in order to focus more on its core building materials business, according to a May report.

Jewson runs nearly 400 stores and employs approximately 6,000 people.

TDR and Apollo declined to comment. Saint Gobain, Jewson, CVC, HIG and One Rock did not respond to requests for comment.