Following a competitive sale process, Saint-Gobain has signed a binding agreement for the sale of all its merchanting brands in the United Kingdom — including the builders’ and timber merchant Jewson — to the Stark Group.
The divested assets, which comprise 600 outlets and employ 8,900 people, are expected to generate revenues of around €2.7 billion in 2022 with an operating margin of around 2%. The divestment is based on an enterprise value of £740 million (around €850 million).
In addition to Jewson, the deal also encompasses well-known brands including Gibbs & Dandy, JP Corry, Jewson Civils Frazer, Minster and International Timber. This transaction is expected to be completed in the first quarter of 2023 and is not subject to any external conditions.
It follows the divestment of Saint-Gobain’s specialist distribution brands in the United Kingdom over the last 18 months (including Graham the plumbers’ merchants), representing around €650 million of revenues at around breakeven in terms of operating margin, based on an enterprise value of around €200 million. Once complete, this latest deal means that Saint-Gobain will then no longer have any distribution businesses in the UK.
These divestments are part of Saint-Gobain’s continued business profile optimisation strategy to enhance the Group’s growth and profitability in line with its “Grow & Impact” plan.
Mike Newnham, CEO of Saint-Gobain Building Distribution UK, said: “Saint-Gobain is a great business and our distribution businesses are proud to have been part of the Group for more than 20 years. We’re now delighted to be joining the Stark Group and entering a new chapter of growth for our businesses and our 8,900 dedicated colleagues.
“We’ll continue to focus on developing our services and solutions and delivering a great customer experience right across our brands to the 100,000s of customers who rely on us each week to deliver their projects. Looking forward, the construction industry has a very important role to play helping customers to decarbonise and renovate homes, and build good quality buildings and infrastructure for the future.”
From the perspective of the Stark Group, the deal marks its entry into the UK market. Headquartered in Denmark, the firm is a leading business-to-business distributor of heavy building materials for the construction industry in Northern Europe, with current net sales of approx. EUR 6 billion.
It works with c.10,000 suppliers and serves 275,000 customers from its 550 locations in Germany, Austria, Denmark, Sweden, Finland, and Norway, where it has in the region of 12,500 employees.
Now holding “a leading national or regional position in all markets”, the Stark Group reports it has doubled its net sales through organic growth and acquisitions since 2019 when the Group acquired Saint-Gobain’s German distribution business. The acquisition of Saint-Gobain Building Distribution Ltd is the 18th acquisition since CVC Capital Partners Fund VII took ownership of the company in May 2021 and represents the Group’s largest acquisition to date.
Group CEO Søren P. Olesen said: “We have a strategy that successfully focuses on professional craftsmen and the renovation and maintenance market, which this acquisition fits very well into. In 2019, we bought Saint-Gobain’s German distribution business, and there are many similarities in this acquisition. We will do our utmost to develop, grow and invest in the company making it the professional craftsmen’s preferred choice.
“Despite the current tough macro-economic environment, the fundamental drivers for the renovation and maintenance market in the UK are attractive. We are facing a challenging transition year, but it is a solid company that we can make thrive and grow.”
He added: “The more than 600 branches and distribution centres are in good locations across the entire UK. We will invest in the business, the people, and the distribution. We have acquired a company with whom we can continue our growth journey.”
