Ferguson plc (“Ferguson”) is a leading distributor of plumbing and heating, ventilation and air conditioning products in North America.
On June 13, 2019, Trian announced its investment in the shares of Ferguson plc (LSE: FERG.L). Trian invested in Ferguson because we believe Ferguson has an attractive business model, competitive advantages due to its scale of distribution, organic growth and margin runway, and a strong balance sheet. We believe Ferguson is a high-quality business, which despite generating nearly all of its earnings from its North American operations, has historically traded at a discount to comparable U.S.-listed peers.
On September 3, 2019, the Board of Ferguson announced the following:
- Its intention to demerge its U.K. operations (“Wolseley UK” demerger) subject to shareholder approval, creating a company wholly focused on serving customers in North America;
- The resignation of John Martin, Group CEO and the succession of Kevin Murphy, CEO of Ferguson’s U.S. operations, effective mid-November 2019; and
- The Board’s decision to formally consider the “most appropriate listing structure for the Group going forward.”
In January 2021, Ferguson divested Wolseley UK to a private equity firm for ~$420 million and announced that it intends to return substantially all of the net cash proceeds of sale to shareholders by way of a special dividend. After the divestiture, all of Ferguson’s revenues and earnings are now generated in North America.
On March 8, 2021, Ferguson’s shares began trading under an additional listing on the New York Stock Exchange (“NYSE”). Ferguson will retain its premium listing on the London Stock Exchange and inclusion in the FTSE 100 index, but the company noted it expects that over time its U.S. listing will facilitate increased ownership by domestic U.S. funds. Ferguson’s Chairman reiterated that, after a period of transition, the Board intends to hold a shareholder vote on a proposal to change the company’s primary listing to the U.S.
Trian is pleased with the steps that Ferguson is taking to improve its long term valuation and looks forward to continuing constructive dialogue with Ferguson’s management team.