Saint-Gobain Rises on Speculation Over Subsidiary Sale

   By Nathan Allen 
 

Shares in Compagnie de Saint-Gobain SA (SGO.FR) trade higher Wednesday morning amid speculation that the French building-materials group is preparing to sell a majority stake in its pipe-making subsidiary to China's XinXing Ductile Iron Pipes Co. Ltd. (000778.SZ).

France's CFE-CGM union on Tuesday said the company is negotiating the sale of a 60% stake in its Pont-a-Mousson subsidiary, known as PAM, to XinXing.

A spokeswoman for Saint-Gobain said the company has been considering enlisting a partner for the business since mid-February, but that the process is still at an early stage.

At 0829 GMT shares were trading 3.7% higher at 34.78 euros ($38.95) having earlier risen more than 5%.

Saint-Gobain's spokeswoman said the pipe-making business has been in difficulties for five years and is being restructured to ensure the best conditions for its development over the next 10 years.

CFE-CGM said the Chinese pipe market is reaching saturation and warned that XinXing may view a deal with Saint-Gobain as a means of offloading its excess production in Europe.

Saint-Gobain has been selling off assets and overhauling its operational structure in an effort to strengthen margins and find savings. In February the company booked a EUR2.04 billion writedown, wiping around 11% off its net asset value.

Write to Nathan Allen at [e-mail]

(END) Dow Jones Newswires

April 03, 2019 05:07 ET (09:07 GMT)

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