Insulation giant Kingspan has walked away from a deal agreed last October to buy a UK manufacturer and distributor of construction products for £37.5 million (€41.9 million), after being unable to renegotiate the terms amid the Covid-19 economic crisis.
London-listed specialist building materials group SIG, owner of the business, called Building Solutions (National) Ltd, said on Thursday that it will now review options for the unit.
The original purchase deal was due to expire on July 7th. However, the UK Competition & Markets Authority (CMA) referred the transaction on April 21st to an in-depth investigation that was not expected to conclude until October.
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.”
It is understood that there is still interest on both sides to return to the table and strike a deal.
Building Solutions controls a number of brands including cladding and steel company Steadmans and United Roofing Products. In 2018, the entire business reported revenue of £60 million, operating profit of £3.3 million and operating cash flow of £5 million.
Kingspan said at the end of April that its sales slumped 35 per cent that month, a normally busy time of year, as construction markets globally were hit by the Covid-19 crisis, with activity in Ireland down 80 per cent.
The group said at the time that it had in excess of €1 billion of cash on hand and committed undrawn facilities, and expects its bank borrowings to be about €580 million by the middle of the year.
For the first quarter of the year group sales were down 3 per cent on the same period in 2019, and would have been off 7 per cent had it not been for a revenue boost from acquisitions.
REF: Irish Times