By Inti Landauro
PARIS--Compagnie de Saint-Gobain SA has agreed to buy a
controlling stake in Switzerland's Sika for 2.75 billion Swiss
francs ($2.8 billion) in cash as part of moves by the French
building-materials group to try to kick-start earnings growth.
The bid for Zurich-based Sika comes against a backdrop of
prolonged weakness in the European construction market and slowing
building-sector growth across the world.
Earlier this year, cement makers Holcim Ltd. and Lafarge SA
announced plans for a merger, structured in part to adjust to a
weak market dogged by overcapacity. In October, Swiss plumbing
equipment giant Geberit AG made a bid for Sanitec Corp. a
Finland-based maker of bathroom ceramics.
But the Saint-Gobain move has received a frosty response from
Sika's management. Saint-Gobain said Monday said it would take
control of the Swiss chemicals supplier by buying out its major
shareholder, the family-owned Schenker-Winkler Holding AG, without
making a full takeover bid.
"The [Sika] board and the group management believe that
shareholder value would be impaired [after Saint-Gobain's move] as
Sika in the planned setup wouldn't be able to continue its
successful growth strategy," Sika said in a statement.
The Burkard family, which owns a 16.1% stake in Sika through its
Schenker-Winkler holding firm, has had the trust of shareholders
because of "the repeated public commitment of the family to act as
Sika's anchor shareholder," the statement said. The stake gives the
family 52.4% of Sika's voting rights.
Saint-Gobain said keeping Sika independent from the rest of
Saint-Gobain would be good for both companies.
"It is going to be a win-win for Sika," said Chief Executive
Pierre-André de Chalendar, highlighting the synergies the deal
would bring both companies.
At a press conference, Sika Chairman Paul Hälg indicated the
transaction came as a surprise to both the board and the management
of the company. The company, which was informed of the transaction
last Friday early in the evening, had conducted an investor meeting
with the family about a week earlier, he said.
There was no indication the family was "dissatisfied" with the
performance of the company in the recent investor meeting, one of
two Sika holds each year. "The family did the sale on their own,"
said Mr. Halg.
Efforts to reach the Schenker-Winkler Holding were
unsuccessful.
Mr. Hälg and Chief Executive Jen Jenisch said the takeover
created the potential for conflicts of interest because
Saint-Gobain and Sika were competitors in some fields. The deal
might also limit Sika's ability to expand into areas Saint-Gobain
where has a presence, potentially putting other investors at a
disadvantage.
Saint-Gobain offered a roughly 80% premium to Friday's closing
price of 3,886 Swiss francs for the family's stake in the Sika.
However, Sika shares dropped more than 14% to 3,341 francs because
Saint-Gobain isn't planning to make an offer for all of Sika's
shares.
Sika, with yearly sales of more than 5.14 billion Swiss francs,
is a chemicals group that supplies of a range of additives for
concrete and cement as well as waterproofing products for the
building sector and noise-damping products for the auto sector.
Founded in 1910, one of Sika's first major commissions came in
1917, with the waterproofing of the Gotthard railway tunnel, one of
the key transport links between northern and southern Europe. A
recent project involved the refurbishment and waterproofing of the
Sydney Harbour Bridge.
The transaction will be completed in the second half of 2015,
after securing the approval of regulators. Saint-Gobain plans to
immediately include Sika's figures in its accounts.
Despite the comments from Sika's management, Mr. de Chalendar
insisted Saint-Gobain wants to keep top executives at the helm of
the Swiss firm after transaction.
He said cost savings and revenue gains would amount to EUR100
million ($123 million) in the first year after the deal closes, and
as much as EUR180 million by the fourth year.
Investors weren't impressed by Mr. Chalendar's depiction of the
deal. Saint-Gobain was the worst performer of the CAC-40 blue-chip
index with a 4.2% decline.
The company's move generates uncertainty, said Josep Pujal, a
market analyst with Kepler Cheuvreux. "We struggle to understand
the price paid to achieve only 16% of the economic interest in the
company," he said.
Saint-Gobain, one of France's oldest industrial enterprises,
also said it plans to sell the remaining part of Verallia, its
bottle and jar manufacturing unit. Saint-Gobain last year sold
Verallia's businesses in North America after trying to sell
unsuccessfully the whole unit for several years.
Write to Inti Landauro at inti.landauro@wsj.com, Neil MacLucas
at neil.maclucas@wsj.com and Andrew Morse at
andrew.morse@wsj.com
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