Saint-Gobain approach provokes Sika schism

The management of construction chemical maker Sika has reacted angrily to construction materials giant Saint-Gobain’s bid to take control of the company. The deal would involve buying-out the controlling family’s stake in Sika, without a public offer to other shareholders.

Saint-Gobain says it plans to purchase Schenker Winkler Holding’s stake in the company, which represents 16.1% of Sika’s capital, but 52.4% of its voting rights, for CHF 2.75 billion (US$ 2.8 billion). Schenker Winkler Holding is a company owned by the Burkard-Schenker family, which has historically controlled Sika.

In a statement highlighting a division between Sika’s executive management and Burkard family members on the Board, the company’s management said, “Sika’s ownership structure is unique. For historic reasons the Burkard family was able to control Sika with only a 16% share in the capital. 84% is owned by public shareholders, which will not receive an offer for their shares. The trust of these shareholders has relied on the repeated public commitment of the family to act as Sika’s anchor shareholder and accompany the Group in the best interest of shareholders.

The statement went on, “The non-conflicted Board members and Group management each independently have come to the conclusion that if the transaction materialises they are no longer in a position to serve the best interest of the company and all its stakeholders. They have therefore decided to resign following closing of the transaction.”

Commenting on the rationale of the transaction, Sika’s statement said, “The Board and Group management of Sika AG have neither been involved nor consulted in connection with the proposed transaction. The Board and Group Management do not support the change in control of SkiaSika to Saint-Gobain. The Board neither sees the industrial logic in the transaction, nor significant synergies for Sika. Furthermore, the Board and Group Management believe that shareholder value would be impaired as Sika in the planned set-up would not be able to continue its successful growth strategy.”

However, a statement from Saint-Gobain said, “Given the proximity of Sika’s activities with those of Saint-Gobain (construction products and innovative materials as well as building distribution), the deal is expected to generate € 100 million (US$ 123 million) in synergies as from the second year (2017), and € 180 million (US$ 220 million) per year as from 2019. The deal will create value by the fourth year.”

Saint-Gobain added that the transaction is subject to regulatory clearance and is expected to close in the second half of 2015.

Sika had revenues of CHF 5.14 billion (US$ 5.25 billion) in 2013. Saint-Gobain’s revenues that year were € 42 billion (US$ 52 billion).