Building material supply giant SIG has abandoned the planned sale of its Building Solutions cladding business to Kingspan for £37.5 million.
The sale of the Building Solutions divisions was first announced last October by SIG as part of its cost-cutting and restructuring strategy.
But the deal attracted the attention of watchdogs at the Competition and Markets Authority (CMA) who launched an investigation.
Kingspan is a leading provider in the UK of standard foam sandwich panels, which are commonly used as insulated cladding on commercial and industrial buildings.
Meanwhile, Building Solutions also sells a range of insulation and specialist construction products through a number of businesses, including Steadmans, Trimform Products, Advanced Cladding & Insulation and United Roofing Products.
After completing its initial Phase 1 investigation in April 2020, the CMA found that the proposed deal could result in customers facing higher prices or lower quality products.
It found that Kingspan and Building Solutions are two of only three key suppliers of standard foam sandwich panels in the UK and would only face serious competition from one other UK-based supplier – Tata Steel – after the deal.
Competition from suppliers of products imported from outside the UK and suppliers of other products sometimes used as insulated cladding is also very limited.
The CMA had moved to an in-depth ‘Phase 2’ review after its concerns were not addressed by the firms.
A spokesperson at SIG said: “As a result of the prevailing market conditions, it has not been possible for the company and Kingspan to agree commercial terms for the extension of the agreement.
“Accordingly, the parties have agreed to terminate the agreement with immediate effect and the disposal therefore will not proceed.
“The company is currently reviewing a number of options regarding the Building Solutions business and will provide further updates when appropriate.”
Following the announcement that Kingspan and Building Solutions have decided to abandon the deal, CMA has confirmed that it will be cancelling its investigation into the takeover.
More information is available on the case page.