Wolseley Plc is following in the steps of other companies like Shire Plc and Ineos Group Holdings Plc in moving operations in order to save on taxes. In the case of Wolseley Plc, which is one of the world’s largest building materials suppliers, they will create a holding company called New Wolseley and situate it on the island of Jersey. At the same time, they will move their tax residence to Switzerland.
Such moves, it is believed, will reduce the company’s tax burden from 34 per cent to 28 per cent. These moves come on the heels of a second year of loss. In further reorganisation, Wolseley is selling off business units and is said to cut 14,000 jobs. They blame the slump in homebuilding and construction in Europe and America on the erasure of profits.
Because of the recent political pressure to get tough with tax avoidance, Wolseley met with government officials prior to the decision. Wolseley will keep the same management in charge and day-to-day operations will remain the same. They will continue to attempt to sell business units that have been placed on the chopping block.
Travis Perkins Plc, which purchased the home improvement chain, Wickes, in 2005, has demonstrated some interest in Wolseley units including Build Center and the Econ Insulation chain.
The company says that all of the measures are absolutely necessary to stay afloat and that, of course, they regret inevitable jobs losses.
Deutsche Bank and Merrill Lynch International will be co-sponsors and brokers to the New Wolseley listing.