Jewson in yard sell-off proposal
Coventry-based Jewson has offered to sell off branches in 22 separate local areas to remedy the Office of Fair Trading's (OFT) competition concerns over its purchase of Build Center. The builders' merchant agreed to buy Build Center from Leamington Spa-based Wolseley UK last year for £145m.
The companies are two of the largest general builder's merchants in the country, with Jewson owning 510 yards.
The government watchdog concluded after reviewing the deal, the merger would not give rise to competition concerns nationally as sufficient competitors would remain in the market.
However, after looking at a "large volume of evidence", including a survey of nearly 10,000 builders, the OFT concluded the deal raised "substantial competition concerns" in 22 local areas in England, Wales and Scotland.
"This was because there were few remaining general builders merchants in these local areas and the OFT was concerned that builders and other tradesmen might see an increase in prices for building materials as a result," the agency said.
To address these concerns, in the hope the takeover can go ahead and avoid being referred to the Competition Commission, Jewson has offered undertakings to sell at least one branch in each of the 22 affected local areas to restore pre-merger competition levels.
Ali Nikpay, OFT senior director and the decision aker in this case, said: "Whilst we concluded that the merger raised no competition issues on a national basis, we were concerned that builders in some local areas could lose out as a result of reduced competition. We are therefore considering branch sales offered by the parties to resolve these issues."
The OFT is required to consult publicly on the offer before taking any decision to accept the undertakings.
While the undertakings in lieu are being considered, the OFT's duty to refer the merger to the Competition Commission is suspended.
The deal was subject to regulatory review by the European Commission, which was completed before it was referred to the OFT.
Jewson is part of the group of companies owned by French multinational Saint-Gobain, active in many building materials sectors.
There are 149 Build Center branches in the UK, trading primarily under the Build Center brand, including a number of specialist glass, ironmongery and timber outlets. It recorded a turnover of £316m 2010 and employs almost 1,600 staff.
