Wolseley, the world's largest distributor of plumbing and heating products, has bought four Dublin-based insulation companies to expand its foothold in what is a significantly growing area of the building materials market.
Higher energy costs and tighter building regulations have led to an increase in demand for insulation in both new and existing homes, something that Wolseley is seeking to take advantage of with its latest acquisition.
The Reading-based company yesterday said it had spent £22 million (€32.7 million) on three acquisitions, one of which was the group of Irish companies formerly owned by Rhodes Securities.
The other two included an acquisition by Wolseley's US unit Ferguson of United Automatic Heating and the purchase by French division Brosette of electrical distributor Sigmatec.
The four Irish groups - Morris Insulation; Acoustic and Thermal Insulation; Customised Insulation Manufacturers; and Construction Insulation Distributors - are all based in Dublin and are among the leading distributors of insulation materials in the Republic.
Combined they had revenue of €15.6 million in the year to the end of August 2005 and gross assets of €12.7 million.
Analysts welcomed the acquisition, though said it was "a drop in the ocean" as far as Wolseley's business is concerned.
Still, the company, which had revenue of £6.7 billion in the six months to the end of January, had made it known it was looking to expand in the area of insulation, as well as geographically in Ireland, and so yesterday's announcement proves it can act on its intentions, one analyst commented.
Another described any move into the insulation market as a positive one given the increased emphasis being placed on sustainable energy and in particular the need for home builders to make new developments more energy efficient.
The importance of this sector was illustrated in recent interim results from Wolseley's Irish rival Kingspan, in which the highlight was its insulation business, where panel sales were up by 17 per cent and board revenues climbed by 10 per cent year on year.
Wolseley last year bought Encom, a British distributor of insulation materials, in an attempt to expand in the sector in the UK.
The group is now the second-largest player in the region behind Sig, which also dominates the European insulation market.
In Ireland, Wolseley already owns building supplies companies Brooks and Heat Merchants, two businesses it has sought to expand in recent times.
In this latest acquisition, Rhodes Securities was advised by Martin Rafferty at AIB Corporate Finance.
