Lixil Group Corp. is terminating its agreement to sell Permasteelisa, an Italian building envelope company, to Grandland Holdings Group following the U.S.’s block of the sale in October. Lixil, a Japanese company, originally agreed to sell Permasteelisa to Grandland, a Chinese architectural design and construction company, in August 2017.

The Committee on Foreign Investment in the United States (CFIUS) blocked the sale on October 22, 2018. Lixil chief financial officer Sachio Matsumoto told Nikkei Asian Review that “the trade war probably had an effect” on the decision.

Lixil announced in a release that it will now focus on creating a strategy to support Permasteelisa’s long-term growth as a part of Lixil.

“The situation with CFIUS provided us with an opportunity to review the Permasteelisa business. We are committed to working through all options to ensure that a robust plan is put in place that will not only strengthen Permasteelisa but also the broader Lixli Group,” said Lixil Group chairman and CEO Yoichiro Ushioda.

“Work has already begun to review the management strategy of Permasteelisa with Riccardo Mollo and his leadership team. Over the coming two to three months we will be developing a clear plan,” added COO Hirokazu Yamanashi. “There is much work to be done to strengthen and grow the business, but we are confident that Permasteelisa demonstrates considerable potential for success.”

Lixil purchased Permasteelisa for approximately $812.6 million* (EUR 573 million) in August 2011. North America is one of its largest markets, with an operating revenue of $473.5 million (EUR 418.6 million) in the fiscal year ending on March 31, 2018.

Permasteelisa released a statement welcoming Lixil’s announcement of the termination of the sale.

“We are really pleased with today’s announcement by our shareholders, as it confirms that Lixil Group is fully committed to supporting and working with Permasteelisa to put the business back on a strong growth footing,” said Permasteelisa CEO Riccardo Mollo.

“After a period of uncertainty we will now work hard with our shareholders to strengthen even further our leadership position in the market, based on our unrivalled ability to turn the greatest architects’ vision into reality,” he added.

Permasteelisa’s operating revenue has fallen in recent years. Its operating revenue increased each year from $1.38 million** (EUR 1 million) in 2010 to $1.7 million** (EUR 1.5 million) in 2015 but has since dropped each year to $1.45 million** (EUR 1.3 million) for the year ending in March 2018.

*Editor’s note: The USD amount was calculated using the exchange rate at the time of the sale, which was 1 EUR = 1.4182 USD.

**Editor’s note: The USD amount was calculated using the average exchange rate for each year.