Reference no: EM131038170

BAXI LOOKS TO EUROPE FOR EXPANSION

In 1866 Richard Baxendale, iron moulder, founded the Baxendale company in northern England. In 1935 the company launched the first product with the Baxi name; it built up a reputation for marketing Baxi boilers. Then, in 1983, the firm was sold as a management buy-out to its employees. This was followed by a series of acquisitions in the 1990s and into the 2000s. In 2004 it was bought by Kidde, the engineering company, and then it was transferred to BC Partners and other investors for nearly £600m (US$1,076m). The company continues with its main UK plant in Preston and factories in Italy, France, Denmark, Germany and Turkey. About half of Baxi's sales (€1bn in 2004: £1.5bn) come from the UK and the remainder are predominantly from continental Europe. In Britain, Baxi is market leader in the boiler business in volume terms.

In 2005, as part of Baxi's strategic expansion, Baxi bought Roca, a leading Spanish boiler maker, for £135.8m (€200m, US$244m) to gain a higher share of the European gas-fired boiler market, valued at about (€5.6bn, £8.2bn). The deal increased Baxi's share of European boiler business to 11 per cent in volume, behind the German companies Vaillant and Bosch, which remain leaders with 18 per cent and 16 per cent respectively. Boilers have a relatively stable market with revenues increasing only slowly in most countries. However, the major makers see growth opportunities through equipping their products with new techniques that reduce energy consumption, so fitting in with the global drive to reduce carbon dioxide emissions. They are keen to switch more households, particularly in poorer countries such as Turkey or in the CEE away from solid fuels and towards ‘cleaner' natural gases. Steady growth is expected in the next few years across most of Baxi's markets, although a downturn from 2005 was predicted in the UK due to government regulations requiring plumbers to install new energy-saving boilers. Consumers were expected to be dissuaded from specifying the new systems, which are more expensive to buy although they offer lower running costs, and instead consumers may choose to repair their older systems. Source: adapted from Marsh (2005).

1. When government is encouraging industry to move towards ‘equipping their products with new T Technologies to reduce carbon dioxide emissions' why might industrial buyers have different approaches to consumers regarding buying such products?