Where Could The Glazing Industry's Takeovers Come From In 2017?

I think that it is widely accepted that 2017 will be a busy year in terms of glazing industry mergers and acquisitions.

The second half of 2017 was a fairly busy one for our industry. After the EU Referendum, there was a flurry of activity which saw a big rise in the number of deals being done. You can catch up with all the major acquisitions here.

But, the question is, where will the next deals come from in the UK glazing market? I try to take a look at where might be most likely in the coming 12 months.

PVCu fabrication

The part of our market that still requires some further consolidation is PVCu fabrication. Year after year the number of PVCu fabricators in the market has declined. This is down to a number of factors, but mainly due to the rise in popularity of other materials like aluminium and timber, alongside rising production costs that have caused small fabricators to leave the market.

During 2016 there were certain groups of businesses, namely Polyframe and Synseal, who were expanding their reach into other parts of the market, including fabrication. It is groups like these where I expect further acquisitions during the course of this year.

More significantly, I think we could see quite a bit more vertical integration of companies in the PVCu supply chain this year. As an example, given the whispers around at the end of last year, it would not surprise me to see a PVCu systems company purchase one of their bigger fabricator customers. Streamlining their supply chain and guaranteeing themselves business. It would be quite a big move should that happen.

But on a more general basis, I would expect to see the most acquisition activity to happen in the PVCu fabrication sector.

Roof sector

At the end of last year Roof Maker Ltd, one of the longest established producers of lantern roof products, was sold in a £30m deal. You can catch up with that acquisition here.

The wider implications for that particular deal was that it raised the profile of the lantern roof sector within UK fenestration, but also the potential asking prices for other lantern roof-focused businesses in the future.

We all knew the potential in the roof sector in general was massive, but there hadn’t been a recent acquisition in that part of the market. Until this deal at least.

During 2017, I would not be surprised to see acquisition activity in the roof sector in our industry. It is feasible that we could see roof makers going after each other, in an attempt to purchase competitors out of the market. The more likely option is outside investors, perhaps non-UK investors, could take over controlling shares in some of the bigger names in this part of the market.

There is considerable growth potential in this part of the market and Sterling is still low. It might be a good time to buy!

IGU Manufacturing

There were a couple of glass industry deals done in 2016. Clayton Glass acquired specialists Romag. Synseal splashed out on the IGU assets of Euroview. I think there is room for more this year.

If you look at some reports, there could still be some more consolidation to come in this part of the market. The very small IGU makers will find their costs have gone up quite sharply in recent months, suffering the same difficulties as the micro-PVCu fabricators. It leaves them open to takeover from local competitors and larger groups.

There may well be some more IGU manufacturers up for grabs during the course of this year. And here’s an outlandish thought: vertical integration between spacer bar manufacturers and IGU makers. Would companies like Edgetech, Swisspacer or Thermoseal consider buying up IGU manufacturers and solidifying their supply chains and business?

I’ve not heard any whispers about such a thing, I’m merely putting an idea out there. It certainly would drastically change the structure of that part of the market.

March of the super groups

I would also fully expect that the industry’s super-groups; Epwin, Polyframe, Synseal, DW3 and others to exercise an energetic acquisition strategy this year. With the industry in a period of modest but sustained growth, it seems like an ideal time for our industry’s biggest groups to really firm up their market positions.

These super groups may look to buy up companies where they are already established, with a view to consolidating their positions. They may also choose to buy companies which would see them enter completely new parts of the market.

Away from these predictions, there are strong whispers about a number of deals not far away from being done. I won’t say who or what at this time, it wouldn’t be right to do so. But, M&A season in our industry may not be too far away from getting started.