The Competition and Markets Authority (CMA) has raised concerns about the potential market impact of Kingspan’s acquisition of materials supplier SIG’s Building Solutions division.
Kingspan and SIG agreed the £37.5 million deal in October 2020 after SIG carried out a strategic review and moved to offload the arm, prompting the CMA to step in to investigate in February.
In a report published today [April 7, 2020], the watchdog noted that Kingspan is the leading provider in the UK of standard foam sandwich panels, which are commonly used as insulated cladding. The CMA pointed out that Kingspan already owns a number of businesses that supply these products in the UK, including Joris Ide. SIG also sells a range of insulation and specialist construction products through businesses including Steadmans, Trimform, Advanced Cladding and United Roofing Products.
The CMA said that as Kingspan and SIG are two of three key suppliers of standard foam sandwich panels in the UK, Kingspan would only face serious competition from one other UK-based firm, Tata Steel, if the proposed deal went ahead.
Colin Raferty, senior director at the CMA, said: “Foam sandwich panels are widely used in non-residential buildings across the UK, such as supermarket distribution centres, hospitals and police stations. Sales of foam sandwich panels in the UK amounted to about £200 million last year, so they account for an important part of the construction costs faced by businesses and public bodies.
“Kingspan is by far the largest player in this market, and this deal would involve it buying up one of its only two meaningful competitors. So, we’re concerned that the deal could damage competition, resulting in higher prices or lower-quality products.”
Kingspan and SIG must now address the CMA’s concerns within five working days. If they are unable to do so, the deal will be referred for a further ‘phase two’ investigation, a process that can result in an acquisition being blocked.
Both Kingspan and SIG have been contacted for comment.
