CORRECTED-UPDATE 1-Grafton to sell traditional merchanting business in Britain for $718 mln

(Corrects paragraph 1 to say firm is “backed by Blackstone-managed funds”; firm is not “Blackstone-managed”)

July 1 (Reuters) - Grafton said on Thursday it will sell its British traditional merchanting business to a firm backed by Blackstone-managed funds in a deal with an enterprise value of 520 million pounds ($718 million), as it focuses on higher-growth businesses.

The building materials distributor, which operates in the UK, Ireland and the Netherlands, also said it will be focused on developing Selco Builders Warehouse branch network and other specialist distribution and manufacturing businesses in Britain.

FTSE 250-listed Grafton will sell the business — which comprises brands such as Buildbase, Civils & Lintels and PDM Buildbase — to Huws Gray, a supplier of construction materials. The deal is expected to close by the end of the first quarter of 2022.

“This (sale) ... is in line with our strategy of deploying our capital resources towards higher growth potential businesses offering superior returns,” Chief Executive Officer Gavin Slark said in a statement.

For 2020, the business had reported annual revenue of 828.2 million pounds and adjusted operating profit of 18.8 million pounds.

$1 = 0.7241 pounds Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Shounak Dasgupta and Uttaresh.V