SIG agreed to Kingspan’s £37.5m offer for the business last October.
That attracted the attention of the CMA who launched a Phase 1 investigation which has found the deal “could leave the merging companies’ customers, typically building contractors, with few alternative suppliers to choose from.”
Kingspan is the leading provider in the UK of standard foam sandwich panels commonly used as insulated cladding on commercial and industrial buildings.
Building Solutions also sells a range of insulation and specialist construction products through a variety of businesses, including Steadmans, Trimform, Advanced Cladding and United Roofing Products.
The CMA said: “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.”
Colin Raftery, CMA Senior Director said: “Foam sandwich panels are widely used in non-residential buildings across the UK, such as supermarket distribution centres, hospitals and police stations.
“Sales of foam sandwich panels in the UK amounted to about £200 million last year, so they account for an important part of the construction costs faced by businesses and public bodies.
“Kingspan is by far the largest player in this market and this deal would involve it buying up one of its only two meaningful competitors. So, we’re concerned that the deal could damage competition, resulting in higher prices or lower quality products.”
Kingspan and Building Solutions must now address the CMA’s concerns within five working days.
If they are unable to do so, the deal will be referred for an in-depth Phase 2 investigation.