French industrials group Saint-Gobain has signed a SFr2.75bn (€2.3bn) deal to gain control of its family-controlled rival, Sika, despite fierce opposition from the Swiss group’s board and management.
Shares in both groups fell sharply on Monday after the French materials company said it had agreed to buy the controlling stake in Sika held by the Burkard family, which owns 16.1 per cent of the Swiss group’s share capital, but 52.4 per cent of its voting rights.
For Saint-Gobain, the move is part of a wider acquisition policy of accelerating the company’s expansion into emerging markets and the US — amid persistent weakness in the European construction industry.
However, the board and management of Sika — which is a manufacturer of construction chemicals and industrial adhesives — said that they had not been consulted about the transaction and threatened to resign if the deal went ahead.
Shares in Sika fell as much as 21 per cent while Saint-Gobain’s stock declined 6 per cent on Monday amid fears the partial takeover could diminish the chance of a full buyout and the clash with management could destabilise the target company.
“The board neither sees the industrial logic in the transaction, nor significant synergies for Sika,” said Sika.
“Furthermore, the board and the group management believe that shareholder value would be impaired as Sika in the planned set-up would not be able to continue its successful growth strategy.”
Pierre-André de Chalendar, Saint-Gobain’s chief executive, criticised the reaction as “emotional” and “unhelpful”, telling the Financial Times that “the management should concentrate on running the business”.
He explained that the Burkard family — relatives of Kaspar Winkler, who founded Sika in 1910 — approached Saint-Gobain a few weeks ago and encouraged the company to participate in a competitive bid process. After Saint-Gobain won, it was the family’s decision not to inform the Sika board, he added.
After the deal was signed on Friday, Mr de Chalendar said he had a “quite constructive” discussion with Sika’s chairman and chief executive on Saturday morning. “Apparently they changed their mind before the end of the weekend,” he added.
Mr de Chalendar said that despite the reaction from Sika, the deal would be good for both companies, and that he expected the situation with the management and the board to “stabilise” over the coming weeks.
He said that the deal would raise the French group’s growth potential, as well as broadening its range of markets. The company expects synergies from the deal of €100m a year from 2017 and €180m a year from 2019.
Saint-Gobain said it has no plans to make an offer for the remaining shares in Sika, which had revenues of SFr5.14bn in 2013.
Analysts at Vontobel said the deal valued Sika at SFr17.1bn, a 78 per cent premium to its market capitalisation of SFr9.6bn at Friday’s close. “[The] Burkard family gets a well-paid exit,” they said.
The deal is subject to clearance from antitrust authorities, with Saint-Gobain saying it expected to complete the transaction by the “second half of 2015 at the latest”.
Saint-Gobain also said on Monday that it planned to sell off its Verallia glass-packaging unit, which accounted for €2.4bn of the French group’s €42bn sales in 2013.