Displaying items by tag: SaintGobain

More mergers and acquisition news emerged this week in the shape of potential buyers for Sika’s US admixtures business. Reporting from Bloomberg revealed that Holcim, HeidelbergCement and Turkey-based Sabancı Holding had all made it, amongst other unnamed companies, to a second round of bidding for the assets. Sika then confirmed this to the Finanz und Wirtschaft newspaper and added that the sale would also relate to Canadian assets as well. The intention here is to bypass the risk of a lengthy competition investigation in the US.

Switzerland-based Sika announced in November 2021 that it had signed a deal to buy MBCC Group from Lone Star Funds, a global private equity firm, for Euro5.2bn. At the time of the announcement Sika said that the transaction was subject to regulatory approval but it added that it was ‘confident’ that all required clearances would be obtained with closure planned for the second half of 2022. Known competition probes are now pending in the UK, Australia and New Zealand. A previous piece from Bloomberg suggested that internal analysis by Sika found that the company might need to divest operations with annual sales of around US$160m with a value of US$400m. However, the latest update suggests a value of up to US$1bn. The US represented US$1.71bn or 18% of Sika’s total group sales in 2021. Sika’s information to shareholders to let them know about the MBCC acquisition in November 2021, showed that MBCC had sales of around US$966m in the Americas in 2021 with 36 production plants. Overall, not just in the US, the deal is expected to change Sika’s technology mix from 40% concrete and cement systems to 49%, with most of the additions coming from concrete applications.

Divestments were always likely in an acquisition this large between competitors with shared geographies. What is interesting here to the cement sector is that the three named interested parties are all cement producers. Holcim is perhaps the least surprising given its size, pivot towards light building materials and the fact that its current head, Jan Jenisch, used to run Sika. If anyone knows how much an admixture company is worth, it’s the guy who ran one five years ago! HeidelbergCement does not have such a large light building materials business footprint but it is demonstrably interested in making heavy building material production more sustainable. Also, as the world’s second largest western multinational cement producer it is likely to be interested in an input market for some of its end products. Sabancı Holding is the outlier in this grouping with a more regional grey cement business based in Turkey, an international white cement business and a diverse set of business interests including finance and energy. Although, even as the smallest of the bunch, it still reported sales revenue of over US$9bn in 2021. One notable absence from the potential contenders list for Sika USA is Cemex. Its Urbanisation Solutions division, which produces admixtures among other products, reported sales of US$1.9bn in 2021 or 13% of the group’s total revenue. US$558m of this was made in the US.

The wider context in the North American admixture market is that the announcement of Sika’s deal with MBCC in November 2021 was followed about a month later when Saint-Gobain said it had entered into a deal to buy GCP Applied Technologies. This followed Saint-Gobain’s acquisition of Chryso in October 2021. However, Saint-Gobain said that the GCP deal would strengthen its position more in North America. Readers can find out more about Saint-Gobain’s ambitions here.

The final word at this stage should go on Lone Star Funds, the current owner of MBCC. Lone Star Funds bought the construction chemicals business from BASF for Euro3.17bn in September 2020. At the time the acquisition closed Saori Dubourg, a member of the board of executive directors of BASF, said “Lone Star has been a professional partner in this transaction and is committed to the future success of the business.” If the reporting is correct, Lone Star Funds is now selling the same business for over Euro5bn. There are two takeaways to consider at this point. One is that the perceived value of products that make cement and concrete more sustainable are growing. The other is that Lone Star Funds timed its acquisition of MBCC from BASF very well.

Saint-Gobain has headed back to the attention of the cement sector this week with a deal to buy GCP Applied Technologies and a joint-venture with Cementos Argos in Colombia.

The first development carries on the French conglomerate’s move into the construction chemicals market. In October 2021 it acquired Chryso for Euro1.02bn. Other recent deals include agreements to buy Romania-based construction chemicals company Duraziv in May 2021 and Mexico-based IMPAC in October 2021. The GCP Applied Technologies deal is valued at Euro2.3bn with closure planned by the end of 2022. As Saint-Gobain put it, “The combined platform of Weber, Chryso and GCP offers customers a highly comprehensive portfolio of construction chemicals solutions with strong complementary geographic footprints.” It says that it sees the planned acquisition as the “logical next step” to expand its market share in admixtures and additives. It also reckons that Chryso and GCP Applied Technologies are complimentary geographically with Chryso positions mostly in Europe, Middle East and Africa and with GCP’s positions in North America, Asia-Pacific and Latin America. Once the deal goes through, Saint-Gobain will operate 75 production sites in the sector in 38 countries. The specialty building materials part of GCP will then be integrated into the CertainTeed subsidiary in North America.

The arrangement in Colombia concerns a joint-venture intended to focus on lightweight and sustainable building materials. Detail is scarce beyond an announcement by Cementos Argos on its website but the focus appears to be on bringing in Saint-Gobain’s mortar products and/or technology into the local market.

This move towards the lightweight building materials market may sound familiar. That’s because it is similar to what Holcim has also been doing recently, notably with its acquisition of Firestone Building Products earlier this year. It is interesting though to see both companies targeting the lightweight sector from different places. Both have also framed their intentions in terms of sustainability goals. Notably, Saint-Gobain has far lower carbon emissions than many cement producers. For example, Holcim reported sales of around Euro22bn in 2020 with absolute gross Scope 1 CO₂ emissions of 110Mt. Saint-Gobain reported sales of around Euro38bn with total Scope 1 CO₂ emissions of 7.9Mt.

At an investors event in October 2021 Saint-Gobain’s chief executive officer Benoit Bazin said that the group’s ambition was to become the worldwide leader in light and sustainable construction. Saint-Gobain’s business portfolio was diverse already before the GCP announcement, with its construction products focused on ‘lighter’ materials such as gypsum wallboard, insulation and glass. Its expansion into the construction chemicals market is of relevance to the cement industry directly through the supply of admixtures for cement and concrete. It’s also of interest to wider trends in construction because the acquisitions show another company chasing the lightweight building materials market. One expectation, as countries and companies have signed up to net zero carbon commitments, is that the demand for lightweight materials in the building envelope will grow and companies are reacting accordingly. The question at this stage is whether there is space in their growing market for all of them.

Colombia: Cementos Argos and Saint-Gobain have launched a joint venture in the area of lightweight construction materials. The new business will supply the Colombian market with mortar and ‘a wide range’ of other products. Cementos Argos says that the venture will combine Saint-Gobain’s global mortars technology and know-how with its own strong leadership and local presence to accelerate the evolution of the construction market towards a sustainable future. It added that the undertaking aims to strengthen both parties’ leadership and regional growth. They expect to conclude the deal in early 2022.

US: France-based Saint-Gobain has entered into a deal to buy GCP Applied Technologies for around US$2.3bn. It said the move was a ‘decisive’ step in helping it to become a leader in construction chemicals with total sales of over Euro4bn. It is also expected to promote the group’s strategy as leader in light and sustainable construction. Saint-Gobain expects to conclude the deal by 2023 and will finance the acquisition through cash on its balance sheet.

Benoit Bazin, the chief executive officer of Saint-Gobain, said, “The acquisition of GCP is an excellent and significant step for Saint-Gobain to further reinforce its worldwide leadership in construction chemicals and strengthen its geographic presence in North America and emerging markets, both objectives being at the core of our ‘Grow & Impact’ strategic plan.” The proposed purchase follows Saint-Gobain’s acquisition of Chryso, another constructions chemicals company, for Euro1.02bn in October 2021.

GCP Applied Technologies is a global producer of specialty construction chemicals with approximate revenues of US$1.0bn/yr, 50 manufacturing plants in 38 countries and it employs around 1800 employees. It manufactures cement additives, concrete admixtures and products for infrastructure and commercial and residential waterproofing.

France: France-based Saint-Gobain has acquired Chryso from financier Cinven for Euro1.02bn. The Le Moniteur newspaper has reported that the group will operationally integrate Chryso into its high performance solutions division. It said that it intends to develop Chryso in markets already served by Saint-Gobain, and to accelerate cross-selling between Weber and Chryso.

CEO Benoit Bazin said "Chryso strengthens us significantly in the growing construction chemicals market, in which we have made 10 acquisitions and opened 16 plants in 18 countries over the past three years to now exceed more than Euro3bn in turnover in 66 countries.”

France: Saint-Gobain has agreed to buy Chryso for an undisclosed sum. It said that the construction chemicals producer had an enterprise value of Euro1.02bn, based on its recent earnings and anticipated synergies. Saint-Gobain intends to finance the acquisition from the proceeds of other divestments made by the group. Key benefits it expects from the purchase include a strengthened position in the construction chemicals market, market growth in the sector, further strategic movements towards sustainability goals through the use of additives, anticipated ease of integration and value for shareholders.

“The acquisition of Chryso is a unique growth platform opportunity for Saint-Gobain to further develop our already strong presence in the growing construction chemicals market. It is fully in line with our environment, social and governance strategy of providing a sustainable and performance driven value proposition to our customers,” commented Pierre-André de Chalendar, chairman and chief executive officer of Saint-Gobain, and Benoit Bazin, chief operating officer.

Subject to consultation and approval with employee representative bodies and competition authorities the acquisition is expected to be finalised in the second half of 2021.

UK: Global not-for-profit organisation CDP has included HeidelbergCement on its Climate Change A-List 2019 for environmental transparency and performance aimed at facilitating a zero-net carbon economy. Only a handful of industrial producers achieved inclusion on the list, including the German steel sector’s Thyssenkrupp and French gypsum wallboard producer Saint-Gobain.

US: Saint-Gobain has signed an agreement for the sale of its US-based fibre cement siding business to Plycem USA, a subsidiary of Elementia of Mexico. The transaction is expected to be finalised in the first quarter of 2014, subject to standard closing conditions.

The business is part of Saint-Gobain's Exterior Products activity of the Construction Products Sector. It manufactures and sells fibre cement siding, trim and accessory products for the US and Canadian residential and commercial construction markets. The business employs close to 250 people and has three US production sites at Roaring River, North Carolina, Terre Haute, Indiana and White City, Oregon.