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French construction products company Saint-Gobain is to sell UK building materials trader Jewson as part of a wider exit from its British business, which has fallen behind European rivals.
The £740mn deal will see the transfer of 600 Jewson branches, including a distribution hub, to Danish group Stark.
“Although profitable, the UK business was still well below best-in-class distribution assets such as France and the Nordics,” Saint-Gobain said.
The company is divesting its UK business as rising inflation and interest rates leave more customers struggling to secure mortgages and other loans to buy and renovate their homes.
Building material companies and the wider construction industry have come under pressure as projects have slowed.
Saint-Gobain said the divestment was part of the group’s strategy to achieve “growth and profitability”.
It is expected to generate revenues of 2.7bn euros this year.
Stark Group Chief Executive Søren P Olesen told the Financial Times that Saint-Gobain is likely moving to focus more on manufacturing than distribution.
Olesen said Stark understood the current market pressures in the UK – the recessionary period is forecast to last 24 months – but added he was reassured by the UK’s “stable renovation market”, where the average home was around 65 years old.
He added that distributors were more resistant to product inflationary pressures because artisans and other clients were likely to pass on higher costs directly to consumers.
“We will take our time to make the necessary investments and other activities so that we are ready when things change.”
The acquisition is expected to be completed in the spring of 2023.
Saint-Gobain acquired Jewson in 2000 through the purchase of Meyer International. The trader opened its first branch in 1836 and now has around 600 branches in the UK, selling materials including timber.
Following the sale, Saint-Gobain will no longer have a distribution business in the UK.
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