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Saint-Gobain’s takeover bid for Sika faces new setback

January 26, 2015
Chemical Value Chain
(Reuters) – An attempt by Sika’s major shareholder to sell the Swiss chemicals firm to French rival Saint-Gobain was dealt a new blow on Monday, when Sika’s board sought to reduce the shareholder’s voting rights.
 
The Burkard-Schenker family, which has majority voting rights in Sika but only 16.1 percent of the shares, agreed last month to a 2.75 billion Swiss franc ($3.1 billion) takeover offer for the company from Saint-Gobain.
 
However, Sika management opposed the deal and its board said on Monday the family should have its voting rights reduced because they were granted in part to protect the company against takeovers.
 
Kepler Cheuvreux analysts said the board’s move could trigger a legal dispute that might delay Saint-Gobain’s purchase of Sika by up to three years.
 
Saint-Gobain issued a stinging response, saying the move went against all the principles of business law and Swiss governance.
 
SchenkerWinkler Holding (SWH), a vehicle of the Burkard-Schenker family, said it considered the move illegal.
 
At 1039 GMT, Saint-Gobain shares were down 1.6 percent at 37.93 euros, while Sika’s were up 2.1 percent at 29.89 francs.
 
Saint-Gobain, Europe’s biggest supplier of building materials, has said buying Sika would generate 100 million euros ($120 million) in annual cost savings from 2017, and create value for shareholders by the fourth year of ownership.
 
However, Sika’s management has disputed the cost savings estimates as well as the industrial logic of the deal, and said it would resign if it went though.
 
Sika’s board said the company’s articles of association ruled that a registered shareholder should not hold more than 5 percent of its shares.
 
The Burkard-Schenker family and its SWH vehicle had only been exempted from this rule because of its close association with the company, which stretches back more than a century, and because it had pledged to protect the firm against takeovers.
 
“Now that the Burkard family/SWH have formed a group with Saint-Gobain, this historical privilege must be considered lost,” the board said in a statement.
 
The board said it had the support of shareholders representing more than 35 percent of Sika’s total capital, more than double the capital held by the Burkard-Schenker.
 
The board also rejected the family’s calls for an emergency shareholder meeting.
 
($1 = 0.8795 Swiss francs) (Reporting by Joshua Franklin, Katharina Bart and Oliver Hirt; Writing by Mark Potter and Joshua Franklin; Editing by Subhranshu Sahu and David Clarke)

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