Saint-Gobain receives antitrust approvals for Sika deal

Chairman of the Sika board, Paul Hälg, warned that the deal would result in a serious conflict of interest at Sika's expense Keystone

French group Saint-Gobain has all the antitrust approvals required for a transaction with Swiss chemicals manufacturer Sika. It received unconditional approval from Brazil’s competition authority on Monday. 

“It is perfectly in line with the other unconditional approvals that Saint-Gobain has already received for this acquisition, including those coming from Switzerland and the European Commission,” said a company statement. 

Saint-Gobain argues that there is no competition with Sika over the production of mortars and hence no conflict of interest in the deal. But the Sika board is convinced that this is not the case. In a letter to shareholders released on December 4, the chairman of the Sika board, Paul Hälg, warned that the deal would result in a serious conflict of interest at the expense of Sika. 

“Saint-Gobain is a direct competitor of Sika in the mortar business. Because Saint-Gobain would own only 16% of the capital, conflicts of interest are inevitable. Having full control over the board of Sika, Saint-Gobain would have an overriding interest to solve such conflicts to its advantage and favour its own line of business.” 

Long battle 

Last December, Saint-Gobain agreed to pay CHF2.75 billion ($2.74 billion) for the Burkard family’s stake in Sika. This offer was a premium of almost 80% over the pre-deal share price. The deal was put on ice by the Sika board and shareholders who challenged the “opt-out” clause which allowed Saint-Gobain to avoid making a similar offer to other shareholders. 

However, in September the Federal Administrative Court ruled in favour of Saint-Gobain and the Burkard family to make use of the “opt-out” clause. 

The Sika board and shareholders also attempted to reduce the voting rights of the Burkard family at shareholder meetings with a view to reducing the influence of Saint-Gobain on the running of Sika through its 16% share of capital. 

“Public shareholders, which own 84% of Sika’s capital, would no longer have adequate representation on the board,” Hälg said. “Saint-Gobain wants to appoint the majority of the members and the chairman.” 

A court ruling on this “restriction of voting rights clause” is expected next year and remains the last significant hurdle to the transaction. 

“Saint-Gobain is respectfully and confidently waiting for the Swiss courts to allow Schenker-Winkler Holding (SWH) [controlled by the Burkard family] to regain its property rights and close the deal,” said the company statement.