Closer to home, Saint Gobain aren’t averse to buying competitors and either running them as stand-alones or subsuming them into the wider business.
Modesty forbids me from fully attributing the quote above, but it was written almost three years ago to the very day (the blog it comes from is here).
Now I’m not suggesting for a moment that the author has some kind of sixth sense into the future (if only!), rather that it has been obvious for a long, long time, that Build Center was not fitting as comfortably into the Wolseley family as it once did.
Someone quite high up in this industry once told me that he believed that there would always be a need for independent builders merchants but that there would eventually only be room for two national players.
If he was right, then Jewson’s purchase of Build Center is by no means going to be the last of these news stories. Especially since it has been reported that Jewson’s main rival to the purchase, Travis Perkins, dropped out of the race over the weekend, showing that TP are clearly still ‘up for it’ in terms of acquisitions.
Surprised? Not really. We’ve all known that Build Center has been for sale ever since Wolseley CEO Ian Meakins put it in the basket along with Brossette, Brandon Hire, Electric Center and Bathstore.
We’ve known that the plans were there since the revamp of Wolseley’s ground-breaking Sustainable Building Center in Leamington turned it into a Plumb Center training academy, focussing on renewable technology and lots of new-fangled energy saving things of the sort sold via Plumb and Parts Centers, rather than Build.
And, as I said earlier, we’ve all known for the last three years at least that something needed to change.
Build Center, with its emphasis on the heavier side of the industry was always going to be hit harder and more quickly than its plumbing bedfellows when the tap was turned off in house-building back in 2008. Since then, Wolseley UK has closed two distribution centres, shut 200 plus branches and lost more than 2,000 employees including a managing director. The wider Wolseley plc has shared in the misfortunes, with profits plummeting and even at one point, causing the group to slip out of the FTSE 100 share index.
The focus since then has been on being careful in the extreme, something that looks to be continued since the money raised from Saint Gobain will be used, sensibly, to pay down debt. The price to be paid – assuming the sale gets past the relevant competition authorities – is £145m, which strikes me as a bit of a bargain. Build Center had sales of £316 million and trading profit of £1m in the last full financial year and sales of £294m and trading profit of £4m in the last 11 months.
The move will give Jewson another 150 or so branches across the country and something of a question as to what to do with them all. Some are performing better than others, some are currently operating in direct competition – often on opposite sides of the road – with existing Jewson branches.
There are bound to be further disposals – this is by no means the end of the story.