Saint-Gobain Swiss Buy Gets Frosty Reception -- Update

By Inti Landauro 

PARIS-- 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.

But the 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 is letting down the public shareholders, which own almost 84% of Sika, while there are few merger benefits for Sika's shareholders, the company said. The family's Schenker Winkler holding company owns a 16.1% stake and 52.4% of the voting rights in Sika.

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.

Saint-Gobain 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.

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.

The company, one of France's oldest indusrial enterprises, also said it plans to sell the remaining part of Veralia, its bottle and jar manufacturing unit, up for sale. Saint-Gobain last year sold Veralia's businesses in North America

Neil MacLucas in Zurich contributed to this article.

Write to Inti Landauro at [e-mail]

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