Trending in Acquisitions? Saint-Gobain Seeks Controlling Interest in Sika
in South Belgium
In December Saint-Gobain announced its plans to acquire a controlling interest in chemical company Sika AG—a move some say is a trend in the building products sector.
“Companies want to position themselves to offer the entire suite of products that a customer must buy in order to meet a given need,” says Michael Collins, managing director Building Industry Advisors LLC in Chicago. He says the potential acquisition could make Saint-Gobain, which already offers glass, doors, windows and other materials, a “one-stop shop.”
The Sika board and management team, however, say they are not in favor of the move and will “resign following closing of the transaction,” according to a company statement. The pending transaction would involve the purchase of Schenker Winkler Holding AG, founder of Sika and owner of 16.1 percent of its capital and 52.4 percent of its voting rights, for $2.84 billion (CHF 2.75 billion), according to Saint-Gobain.
“In response to numerous requests from shareholders and with the intent of entering into a constructive dialogue, Sika will discuss the situation resulting from the planned transaction between the Burkard family [which is Sika’s biggest shareholder and is owned by Schenker Winkler Holding AG] and Saint-Gobain with its investors,” according to a Sika statement.
Furthermore, the Burkard family, which already has three Schenker-Winkler affiliated directors on Sika’s board, wants to replace three of the board members opposed to the deal with a group it has selected, according to news reports.
According to Sika management, the planned transaction is not in the best interest of the company or its public shareholders.
“Public shareholders (84 percent of capital) [will be] deprived of adequate compensation for change of control/fundamental change in nature of investment,” according to information posted on the Sika website. “[There are] inherent conflicting interests on all levels: shareholders, board, management and operations. [There are] significant implied complexities likely to substantially slow down Sika’s organization and impair Sika’s successful growth model ...”
Saint-Gobain also plans to launch a competitive process for the sale of Verallia, a glass packaging company.
“The two transactions will accelerate the group’s strategic refocus on the design, production and distribution of innovative, high-performance solutions for habitat and industry,” says Pierre-André de Chalendar, chairman and CEO of Saint-Gobain. “The transactions meet the objectives we announced in November 2013 to raise the growth potential and reduce the capital intensity of our businesses, increase our presence in emerging countries and in the U.S., and expand our range of differentiated products supported by strong brands.”
Following the acquisition, Saint-Gobain says it plans to fully consolidate Sika in its accounts. Saint-Gobain insists it does not intend to launch an offer for Sika’s remaining shares and “has full confidence in the company to continue developing the business.”
Saint-Gobain expects the deal to generate $124 million USD in synergies in the first three years and $224 million per year beyond 2019.
The transaction is subject to clearance from anti-trust authorities and is expected to be finalized by the second half of 2015.
According to Collins, if the acquisition goes through it could be beneficial to Saint-Gobain for a number of reasons.
“It will increase St. Gobain’s wallet share with any customer that is currently using their products, but not Sika’s, who decides to start using Sika,” he says. “Customers want to buy from one-stop suppliers because it improves their visibility of and control over their supply chain.”
He adds, “Finally, it prevents a competing company that has made the decision to be a one-stop provider from getting a ‘foot in the door’ by offering the Sika products that St. Gobain currently does not offer.”
And, according to Collins, this could be just the beginning.
“More combinations and acquisitions of companies with complementary and non-overlapping products should be expected in the future,” he says.
Trulite Acquires AGC’s Fabrication Assets, Texas Tempered Glass
Trulite Glass & Aluminum Solutions LLC is increasing its presence as a North American fabricator. The company completed a number of acquisitions in late 2014, including the commercial fabrication assets of AGC Glass Company North America Inc. Financial terms of the private transaction were not disclosed. AGC residential assets are not part of the acquisition.
“This acquisition will allow Trulite to continue to better serve our customers while broadening our national presence and working with them to improve our business,” says Paul Schmitz, CEO of Trulite. “This transaction is further evidence of our commitment to create the best company in the industry through continued growth and operational excellence.”
According to an AGC announcement, it will continue to focus on the core strength of manufacturing glass and innovating new coating technologies. In addition, the company will continue to invest in expanding the capabilities of its Boardman, Ohio, and Quakertown, Pa., residential fabrication plants. AGC’s team of architectural representatives will continue to work closely with designers and architects, driving specifications for AGC architectural and interior products in all the regions of North America.
“As part of the world-wide AGC Group, we are committed to the North American market and innovation in float glass and coating technologies. With this new structure, we will focus on serving our business partners even better in our key segments: commercial, residential and industrial,” says Michael Antonucci, senior vice president and general manager of AGC North America Building and Industrial Products division.
In November Trulite finalized the acquisition of Houston-based Texas Tempered Glass Inc. Financial terms of the private transaction were not disclosed.
The acquisitions are the company’s fourth and fifth since April 2011.
© Copyright 2015 Key Communications Inc. All rights reserved.
No reproduction of any type without expressed written permission.