Hunton & Williams Represents Wolseley plc in Sale of Stock Building Supply to New Joint Venture

Time 4 Minute Read
September 21, 2009
News

London — 21 September 2009 — A multidisciplinary team from Hunton & Williams represented Wolseley plc in the sale of its controlling interest in Stock Building Supply to The Gores Group. Wolseley plc is the world's largest specialist trade distributor of plumbing and heating products to professional contractors and a leading supplier of building materials to the professional markets. Hunton & Williams has acted for Wolseley plc since 1983, when it first entered the US marketplace, in more than 100 acquisitions, helping it become one of the largest distributors of plumbing, heating and building products in the United States.

Wolseley sold 100 percent of its shares of Stock Building Supply Holdings LLC to a joint venture company ("NewCo") in exchange for 49 percent of the common equity of NewCo and future equity and financing commitments. The Gores Group, an American investor, owns a majority interest in NewCo. Following the sale, the Stock companies filed a prepackaged bankruptcy plan. Wolseley agreed to provide financing during the bankruptcy. The plan provided for the payment of all creditors, thus preserving Stock’s valuable relationships with its trading partners. It also enabled Stock to restructure its business to focus on certain strategic markets and reduce stranded occupancy costs. The plan was approved by the Delaware Bankruptcy Court on 18 June, and the companies emerged from bankruptcy this summer. Upon emergence from bankruptcy, Gores made additional equity investments in the business and arranged an asset based loan to finance the future needs of the business.

This sale culminated a process that began in January and was accelerated in March when Wolseley publicly announced that it would sell Stock or exit the business by 31 July. The Hunton & Williams team strategically advised Wolseley, which met or exceeded all of its expectations for the transaction almost two months before the deadline. The announcement of the transaction surprised the market and resulted in a significant uptick in Wolseley's share price.

"This was a very exciting deal under challenging circumstances," said Douglas S. Granger, who led the Hunton & Williams team. "Both Wolseley and Stock had a strong aversion to any solution involving bankruptcy because of the importance of their reputation and trading relationships. Wolseley also needed a sale that was not contingent on subsequent events. We were able to design an unconventional solution that accomplished a quick and definitive sale, allowed a sensible restructuring of the business under the new investor's direction and preserved an upside for Wolseley’s shareholders when the housing market recovers." Granger also emphasized the importance of the collaborative effort with other professionals in the transaction. “We would not have been able to implement this unconventional structure without the flexibility and cooperation of Shearman & Sterling (Stock's bankruptcy counsel) and Skadden Arps (Gores' counsel). Wolseley's bankers, UBS and Barclays Capital, also played a key role running a process and educating potential buyers of the unusual requirements." The Hunton & Williams team advising Wolseley on this transaction involved 18 partners, 23 associates and 6 paralegals from 12 different practice groups in 7 offices. "This was a remarkable team effort of which we are all very proud," Granger added.

About Hunton & Williams

Hunton & Williams provides legal services to corporations, financial institutions, governments and individuals, as well as to a broad array of other entities. Since their establishment more than a century ago, Hunton & Williams has grown to more than 1,000 attorneys serving clients in 100 countries from 19 offices around the world. While key practices have a strong industry focus on energy, financial services and life sciences, the depth and breadth of the firm’s experience extends to more than 100 separate practice areas, including bankruptcy and creditors rights, commercial litigation, corporate transactions and securities law, intellectual property, international and government relations, regulatory law, products liability, and privacy and information management.

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