Baar,18.12.2014

Sika bosses outline solution

The Sika management and the board of directors, who oppose the sale of Sika to the French conglomerate Saint-Gobain, yesterday signaled a willingness to reach an amicable solution in the takeover battle. ‘Sika meets investors' is the title of a media statement from the building materials group in Baar, which states that Sika wants to discuss the proposed takeover with the investors with the intention to engaging in a constructive dialogue. On request, Sika spokesman Dominik Slappnig explained as follows: "We are responding to inquiries from various shareholders and are in discussions with a number of investors." A first investor meeting was held in London, and further discussions will follow. Sika’s major shareholders include the UBS, the CS, Alliance, Blackrock and OppenheimerFunds.
 
The Sika website now shows a twelve-page PowerPoint presentation, in which the company explains its reservations about the takeover to the investors. Board Chairman Paul Hälg and CEO Jan Jenisch maintain their opposition to the planned structure. The acquisition by Saint-Gobain deprives the public shareholders, who account for 84% of the capital, of an adequate counter-value for the change in the controlling majority. In addition, they should also have the opportunity to make good their current substantial losses - at least partially. The presentation indicates that there are conflicts of interest at all levels, and the overall complexity will affect the growth of Sika.
 
Despite its criticism, the Sika management indicates that it is open to dialogue, and presents solutions to "eliminate the obvious shortcomings of the transaction" and "to make good the significant loss in value last week".
 
The mortar business of Saint-Gobain – with an annual turnover of 2.3 billion euros – should be integrated into the Sika Group. The two companies would thereby not compete, and Sika could therefore enjoy unlimited development. Christian Arnold, an analyst at Bank Vontobel, sees the proposal as a possible solution to the conflict between Saint-Gobain and the Sika management, which has threatened to resign in the event of a takeover. "The integration of the mortar business under the umbrella of Sika could persuade the management to stay," he believes.
 
The two companies could also continue to exploit synergies, although this would lead to changes in the structure of the whole transaction. Sika would probably finance the acquisition of its own shares and would have to carry out a capital increase. Saint-Gobain could increase its holding in Sika with the proceeds from the sale. "Whether Saint-Gobain would agree to this is very questionable, however," says Arnold.
 
For Marc Possa, who has investments in Sika with the Sara-Select Fund, the proposal makes sense for another reason: "The conditions would thereby be created to introduce the unit share, and end the blatant discriminatory treatment of shareholders." After the latest development in this takeover drama, the ball is now with Saint-Gobain, says the Zurich Cantonal bank. Up to now, the French company has seemed unwilling to make concessions to the public shareholders of Sika, although they have not made any statement as yet.
 
This action of the Sika management has given investors new hope, and the shares rose 2.9% yesterday. Since the announcement of the sale of the Burkard family shares to Saint-Gobain on December 8, the public shares have lost more than 20 percent in value. The Saint-Gobain shares have fallen by 10%.