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UPDATE 1-Grafton to review 6 traditional merchanting businesses in Britain

(Adds analyst comments, background)

April 16 (Reuters) - Building material distributor Grafton Group said on Friday it has appointed Rothschild & Co to review some of its traditional merchanting businesses in Britain.

The company said the review, focused on six of its businesses including Buildbase and Civils & Lintels, may or may not result in the sale of some or all of these businesses. (refini.tv/3trV7lK)

Liberum analysts estimate the businesses to have revenue of about 1 billion pounds ($1.37 billion), and that a sale might bring in around 300 million to 400 million pounds, with private equity a more likely buyer.

“This news backs up our thesis that this part of the group is challenged,” the analysts said.

Apart from Buildbase and Civils & Lintels, Grafton said the strategic review will include PDM Buildbase, The Timber Group, Bathroom Distribution Group and NDI businesses. No other businesses form part of the strategic review, according to the company.

Grafton said in February it remained cautious about first-half revenue trends given continuing uncertainty from the COVID-19 pandemic. The company reported then that annual revenue and adjusted operating profit for 2020 fell about 6% each.

The company’s shares are up about 20% this year. ($1 = 0.7276 pounds) (Reporting by Vishwadha Chander and Yadarisa Shabong in Bengaluru; Editing by Shounak Dasgupta)

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