YPO drops £50m acquisition amid competition concerns

3 November 2020

Yorkshire Purchasing Organisation’s (YPO) £50m acquisition of Findel Education Resources has been abandoned after the UK competition watchdog raised concerns. 

YPO, a group purchasing organisation owned by 13 local authorities, announced in 2019 its intention to buy Findel, an education resource supplier, with the aim of driving efficiencies.

But provisional findings in an inquiry by the Competition and Markets Authority (CMA), released in October, said the deal could result in “substantial lessening of competition” in educational resources, such as stationery, furniture, and art and science materials for primary, secondary and nursery schools throughout the UK.

The CMA said the organisations were close competitors and the main suppliers in the market and the removal of competition would likely result in “increased prices or reductions in service levels, quality and the range of products offered by the merged company”.

The CMA concluded blocking the merger would most likely resolve any competition concerns and on Monday YPO announced it would not be proceeding with the purchase.

Stuart McIntosh, inquiry group chair at the CMA, said: “These firms are two of the leading suppliers of educational resources in the UK, so it’s important that the CMA protects schools and nurseries who rely on their products. The loss of competition as a result of this merger would likely lead to either higher prices or reduced service, and less choice for schools, which are already under considerable financial pressure.”

The parties had responded, in statements to the investigation, that the reason for the merger was not to reduce competition but “a need to achieve efficiencies in order to maintain current competitive pricing and position in the market”.

Simon Hill, managing director at YPO, told SM: “In December 2019 we announced our intention to purchase Findel Education with the aim of returning more money back to the public sector and to drive better value. We can confirm that the sale and purchase agreement has been terminated.

“In any event YPO will continue to provide products and services to our customers across the education sector and to the wider public sector, with competitive pricing and excellent customer service.

“The world is very different to the one we all expected coming into 2020, so our commitment to driving efficiency through innovative solutions, delivering on both public sector cost savings and social value, is more important than ever.”

YPO was formed as a group purchasing organisation in 1974. In 2014 it formed a separate limited company to sell goods and services.

Findel Education’s parent company Studio Retail Group said: “The parties do not believe that there is a reasonable prospect of the transaction being cleared despite the dynamism and highly competitive nature of the market, and the benefits arising from the proposed transaction for schools and nurseries.

“The transaction will not now proceed to completion.”

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