Lone Star Said to Weigh Options for $3 Billion Stark Group

(Bloomberg) -- Lone Star Funds is exploring options for its building-materials retailer Stark Group A/S, which could fetch about 2.5 billion euros ($3 billion), according to people familiar with the matter.

The U.S. private equity firm is working with Lazard Ltd. to consider a potential sale or initial public offering of Stark, the people said, asking not to be identified discussing confidential information.

Deliberations are ongoing and no final decisions have been made, the people said. Representatives for Lone Star and Stark declined to comment. A representative for Lazard didn’t immediately respond to request for comment.

Stark, which traces its roots back to a small timber yard in late 19th century Denmark, sells and distributes building materials to tradespeople in northern Europe. The company employs 10,000 people in more than 400 branches, according to its website. In 2019, it acquired German distributor Saint-Gobain Building Distribution Deutschland GmbH for an enterprise value of 335 million euros.

Lone Star bought Stark three years ago for 1 billion euros from U.K.-listed plumbing and heating group Ferguson Plc.

A sale would add to $2.6 billion of transactions targeting building-materials companies in Europe this year, according to data compiled by Bloomberg. While the coronavirus lockdowns of 2020 have hit construction companies by halting projects, the sector is expected to play an important role in post-pandemic recoveries.

In late October, Lone Star agreed to buy retirement home developer McCarthy & Stone Plc in a 630 million-pound ($826 million) deal, becoming the latest private equity firm to build stakes in U.K. real-estate companies during the pandemic.

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