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Sika team dismiss merger talks as 'unconstructive'

Management continue to oppose Saint Gobain's purchase of founding family's controlling stake in $3.2bn deal

A Saint-Gobain Gyproc factory
A Saint-Gobain Gyproc factory

The management team running Swiss building materials giant Sika has held talks with its French rival Saint Gobain about the latter's buyout of a controlling stake in the company from its founders, but said that talks were not constructive.

Sika's management revealed on 8 December 2014 that Saint Gobain was set to buy a stake in the company held by the Burkard family, which held only 16.1% of the shares but 52.4% of the voting rights in a deal worth CHF2.75bn ($3.2bn).

Saint Gobain said that acquiring the controlling interest would allow it to generate synergies of around $116m a year by 2017 and around $208m by 2019.

However, Sika's management said that it believed the deal was potentially damaging to the stock held by the remaining 83.9% of shareholders, to whom Saint-Gobain has not made an offer. The Burkard family has since sought an EGM at which it plans to remove certain board members, but management said last month that it has the support of a number of international investors in opposing the deal, including the Bill and Melinda Gates Foundation Trust, Fidelity Worldwide Investment and Threadneedle Investments, among others.

In a statement issued following Friday's meeting, the management said that it entered talks in "good faith", but added that it believed that Saint-Gobain "continues to ignore the detrimental effects of the transaction on Sika and its shareholders.

"Furthermore, we distance ourselves from any claim made by Saint-Gobain that we have a joint view on possible synergies or any other aspect of the transaction," the statement said.

Sika is currently the biggest manufacturer of construction chemicals worldwide, with sales up 13% to CHF5.57bn ($6.5bn) in 2014. It also employs around 60,000 staff.

Saint-Gobain, which employs 190,000 and had sales of around $48.6bn in 2013, had earlier said that its intention would be to continue running Sika in the same manner, keeping the company listed on the Swiss Stock Exchange and its headquarters in the town of Baar.

The company, which makes Gyproc plasterboard, said the synergies would come from developing new markets together and greater buying power, rather than any wider reorganisation, although it plans to introduce "a small, central team in the areas of purchasing, R&D, sales and development" made up of staff from both firms in order to roll out best practice across each company.

The firm added it was confident that its proposed strategy would "enable this worldwide leader of construction chemicals and adhesives to increase even more its growth and improve its profitability to the greatest benefit of its employees and all its shareholders."

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Construction Week - Issue 745
Jun 30, 2019