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Big, Bigger, Biggest?

Out of the sea will rise Behemoth and Leviathan,

I had a whole blog planned for yesterday morning about energy prices, shortages and Insulate Britain, with their highly reasonable conviction that one of the best ways of tackling our climate change problem is to properly insulate our houses and buildings. But, also, their ridiculous idea that the best way to do this is to glue themselves to the M25, causing 15+ miles of traffic jams, thereby pumping excess carbon into the atmosphere and losing much of their message in the process.

That will have to wait for another day. First thing yesterday morning, I had yet another cup of tea go cold on me while I processed the news that we all knew, deep down, was going to happen at some point.

When Grant & Stone became part of the Cairngorm Capital family in November 2019, just weeks after Chandlers Building Supplies did likewise by merging with Parker Building Supplies to create Kent & Sussex’s largest builders merchant group, the grapevine was rife with speculation that the two separate entities would merge to create a mini-behemoth in the south. That was before the acquisition of RGB, Total Plumbing, BuildIt and CRS proved the extent of the group’s ambitions.

Still, things change. Like the Spanish Inquisition, no-one expects a global pandemic to come along and cause chaos. The industry that emerges from Covid -19 was never going to be the same one that went into it. Similar, of course, with many of the old, familiar faces, some of them even in the same jobs, the same passion for growth and dedication to customer service and the industry. But different.

So, it seems it is perfectly plausible for someone to sit in front of the managing director of Cairngorm Capital in November 2019 and ask the question – are you going to bring the two divisions together? – and get an answer which makes perfect economic sense. Only for the same question to elicit a completely different answer today. What is right for a business in November 2019 isn’t necessarily right for the same business in September 2021. A week can be a long time in politics; 18 months in merchanting can be an eternity.

The merger of Grant & Stone Group with Independent Builders Merchant Group has shaken up the top of the league tables. We now have Travis Perkins, of course, right at the top of the tree with the £6bn+ turnover. In fact, they’re not even in the same ball park as the others. The UK’s representative in some kind of European Super League of merchants perhaps?  Saint Gobain Building Distribution and Wolseley are still hanging in there, but with the sale of its traditional merchanting businesses to Huws Gray, Grafton has slipped back, and now Huws Gray and the enlarged IBMG are jostling around like puppies over a squeaky toy for the 4th spot.

It is, I suppose a good thing, that there is so much external investment into this sector. It’s nice that there is a belief that there is money to be made and growth to be gained from investing in a sector that, all too often, gets overlooked in favour of ‘sexier’ industries.

There are a few questions that occur to me, though. How big is big enough? How big is too big? How big can you afford to get and still be able to find someone with enough of the green stuff to offer you an exit? And, of course, the eternal question, the one that we’re all asking: what, or who, is next?

Take a look at them gaps…..

About Fiona Russell-Horne

Fiona Russell-Horne
Group Managing Editor across the BMJ portfolio.

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