French construction products company Saint-Gobain is to sell UK building materials merchant Jewson as part of a broader exit from its British business, which has fallen behind European rivals.
The £740mn deal will lead to the transfer of 600 Jewson branches, including distribution hubs, to the Danish group Stark.
“Although profitable, the UK business was still much below best in class level of distribution assets like France and the Nordics,” said Saint-Gobain.
The company is divesting its UK business as rising inflation and interest rates leave more consumers struggling to secure mortgages and other loans to buy and renovate their homes.
Building materials companies and the wider construction industry have come under pressure as projects slow.
Saint-Gobain said the divestments were part of the group’s strategy to achieve “growth and profitability”.
The divested UK assets are expected to generate revenues of about €2.7bn this year.
Søren P Olesen, chief executive of Stark Group, told the Financial Times it was likely Saint-Gobain was moving to focus more on production than distribution.
Olesen said Stark understood current market pressures in the UK — predicting a period of recession to last for 24 months — but added that he was reassured by the UK’s “stable renovation market”, where the average home was about 65 years old.
He added that the distributor was more resistant to the pressure of product inflation as craftsmen and other clients were likely to pass on high costs straight to consumers.
“We will take our time doing the necessary investments and other activities so that we are ready when things are turning.”
The acquisition is expected to complete in the spring of 2023.
Saint-Gobain acquired Jewson in 2000 through the purchase of Meyer International. The merchant opened its first branch in 1836 and now has about 600 branches in the UK, which sell building materials including timber.
After the sale, Saint-Gobain will no longer have any distribution businesses in the UK.
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