By Joe Hoppe

Grafton Group PLC said Thursday that it has agreed to divest its traditional merchanting business in Great Britain to Huws Gray, for an enterprise value of 520 million pounds ($719.2 million).

The building-materials distributor said the divestment to Huws Gray--an independent builder's merchant controlled by equity funds managed by Blackstone Group Inc.--is expected to close by the end of the first quarter of 2022.

Grafton said it will retain freehold properties with development potential that have a market value of around GBP25 million.

The agreement follows Grafton's strategic review of the business, first disclosed on April 16. The traditional merchanting business incorporates the Buildbase, Civils & Lintels, PDM Buildbase, The Timber Group, Bathroom Distribution Group, Frontline and NDI brands.

In 2020, the business posted revenue of GBP828.2 million and an adjusted operating profit of GBP18.8 million.

"This is an attractive outcome for Grafton and is in line with our strategy of deploying our capital resources towards higher growth potential businesses offering superior returns," Chief Executive Gavin Slark said.

Shares at 0821 GMT were up 47.0 pence, or 4.1%, at 1,194 pence.

Write to Joe Hoppe at joseph.hoppe@wsj.com

(END) Dow Jones Newswires

07-01-21 0438ET