Plumbing giant Ferguson has confirmed it is considering switching its stock market listing to the US as it spins off its UK arm, Wolseley, this year.
The group insisted the US is its “natural” home for a listing and is kicking off a further round of talks with shareholders over a switch away from London.
Ferguson, which is soon to demerge the Wolseley business, is considering two options – a dual listing on Wall Street while maintaining its existing listing in London, or switching its primary listing to a US stock exchange and losing its coveted place in the FTSE 100 index.
It said it believes the cost of either option would not be “material” and could go ahead by summer 2021.
The group will give an update after shareholder discussions in the spring.
The board believes that Ferguson’s natural long-term listing location is the USA but it is mindful that this is a complex issue for many of our existing shareholdersGeoff Drabble, Ferguson
Ferguson also separately announced a 500 million US dollars (£386 million) share buyback.
Chairman Geoff Drabble said: “The board believes that Ferguson’s natural long-term listing location is the USA but it is mindful that this is a complex issue for many of our existing shareholders.
“We will now commence a period of further consultation with our major institutional shareholders and will listen carefully to their feedback before setting out any firm proposals in the spring.”
In September last year, Ferguson announced plans to split off its UK operations following a lengthy strategic review of the group.
The UK division has been suffering sliding sales amid challenging trading conditions.
It also came under scrutiny from US hedge fund and activist investor Trian Partners, run by billionaire entrepreneur Nelson Peltz, which bought a 6% stake last June.
The group has recently seen a changeover at the top, with chief executive John Martin – at the helm since 2016 – stepping down in November and replaced by its US boss, Kevin Murphy.
Shares in Ferguson rose 6% on news of its share buyback plans.
But Charlie Campbell, analyst at Liberum, said Ferguson could struggle to get its US listing plans past shareholders.
He said: “Either option requires 75% shareholder approval, which has always been the stumbling block.”
It is thought that the move could prove contentious with UK-based fund managers, as their mandates can prevent them from holding overseas listed stocks.