Sika Chairman Digs In Over Saint-Gobain Battle - Update

By John Revill 

ZURICH--Construction and automotive chemicals maker Sika AG is preparing for the long haul as it seeks to fend off a hostile $2.78 billion takeover from French rival Saint-Gobain SA, the chairman of the Swiss company said Friday.

Baar-based Sika has been embroiled in a takeover battle for more than a year after Saint-Gobain offered to buy the controlling stake held by the company's founding family without making an offer to other shareholders, which include billionaire Bill Gates.

Chairman Paul Hälg said Friday that Sika's position had been boosted by the company posting its highest ever annual profit.

"I am very pleased that these strong results support our defense of Sika against Saint-Gobain," said Mr. Hälg, who the founding family have tried to replace.

He said the results showed that Sika's business hadn't been damaged by the "difficult situation" with Saint-Gobain, that Sika could be successful as an independent company, and didn't need Saint-Gobain.

"The way we have organized ourselves means we can work in this way for a long time," Mr. Hälg said. Sika--whose products have been used in The Shard building in London--was prepared to continue resisting Saint-Gobain for as long as it takes, he said.

The takeover sparked fierce opposition because Paris-based Saint-Gobain has proposed to buy only the 16% stake held by Sika's founding Burkard family for 2.75 billion Swiss francs ($2.78 billion). Buying the family's investment vehicle gives control of Sika as it has 52% of the voting rights in the Swiss company.

Sika's management has responded by limiting the family's voting rights to 5%, a move that is now being disputed in Swiss courts with a decision expected this summer, although appeals could be lodged by either side.

Mr. Hälg said Sika had made an alternative proposal to buy the Burkard family's stake, "but they don't want to see it."

"I am very confident with our legal arguments," he said. "I don't think that will be the end of it in the summer."

Earlier Friday, Sika reported a 5.4% rise in net profit for 2015 of 465.1 million Swiss francs ($469.8 million) in the 12 months to Dec. 31, up from 441.2 million francs a year earlier, beating analyst expectations.

Sales dipped 1.5% to 5.49 billion francs from 5.57 billion francs in 2014, as the strength of the Swiss currency took a toll, though were slightly ahead of analyst expectations for 5.47 billion francs.

A spokesman for Cascade Investment LLC, the investment vehicle controlled by Bill and Melinda Gates, said they continued to "fiercely oppose" a Saint-Gobain takeover.

"There needs to be a solution that fits all the investors and not just members of one family, and we would like Saint-Gobain to walk away," the spokesman said.

This looks unlikely with Saint-Gobain repeating its commitment to the deal.

"We are both patient and committed to completing the Sika-transaction," said Saint-Gobain CEO Pierre-André de Chalendar as the Paris company reported its full-year earnings on Thursday.

Write to John Revill at [e-mail]

(END) Dow Jones Newswires

February 26, 2016 07:33 ET (12:33 GMT)

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