REG - Compagnie St-Gobain - Acquisition

Compagnie de Saint Gobain SAAnnouncement

06/12/2021 07:00

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RNS Number : 6457U  Compagnie de Saint-Gobain  06 December 2021

PRESS RELEASE

 

 

December 6, 2021

 

SAINT-GOBAIN MAKES A DECISIVE STEP TO ESTABLISH A LEADING POSITION WORLDWIDE
IN CONSTRUCTION CHEMICALS BY SIGNING A DEFINITIVE AGREEMENT TO ACQUIRE GCP
APPLIED TECHNOLOGIES

 

Saint-Gobain and GCP Applied Technologies announce that they have entered into
a definitive agreement pursuant to which Saint-Gobain will acquire all of the
outstanding shares of GCP for $32.00 per share, in cash, in a transaction
valued at approximately $2.3bn (approximately €2.0bn). This acquisition is a
decisive step in establishing Saint-Gobain's leading position worldwide in
construction chemicals with total sales of more than €4bn (up from €3bn),
and furthers the Group's strategy as worldwide leader in light and sustainable
construction.

 

The agreed upon price represents a multiple (before synergies) of
approximately 13.2x GCP's 2022E adjusted EBITDA of $170 million and a
multiple of 8.8x EBITDA post run-rate synergies of $85 million, and a premium
of 39% above the volume-weighted average price per GCP share for the
30-trading days ended on the undisturbed date of November 30, 2021. This
acquisition meets the Group's strategic and financial criteria articulated
during the Capital Markets Day of October 6, 2021:

1)   Strengthening leadership positions notably in North America and Asia as
well as offering enrichment in light and sustainable construction

2)   Value creation by year 3 following the closing of the transaction and
EPS (Earnings Per Share) accretive from year 1 (+4% before synergies)

3)   Maintaining a strong balance sheet and solid credit rating with a
limited impact of +0.3x net debt to EBITDA

 

The business combination has been unanimously approved by the Boards of
Directors of Saint-Gobain and GCP Applied Technologies. Saint-Gobain has
obtained undertakings from Starboard and Standard Investments (formerly known
as 40North)/Standard Industries to vote their respective stakes of 8.9% and
24.2% in favor of the transaction.

 

Closing of the transaction is subject to GCP shareholders' approval, antitrust
approvals and satisfaction of other customary closing conditions; it is
expected to close by year-end 2022.

 

Strategic Benefits

 

GCP Applied Technologies is a major global player in specialty construction
chemicals with approximately $1.0bn revenues, 50 manufacturing plants in 38
countries and employs around 1,800 people. It brings a global platform with
established success in cement additives, concrete admixtures, infrastructure
and commercial and residential waterproofing. GCP is a unique opportunity for
Saint-Gobain to establish a leading worldwide presence in the growing
construction chemicals sector, delivering both sustainability and performance
for customers. The combined platform of Weber, Chryso and GCP offers customers
a highly comprehensive portfolio of construction chemicals solutions with
strong complementary geographic footprints.

 

·      After the successful acquisition of Chryso, GCP is the logical
next step to expand Saint-Gobain's presence in admixtures and additives, which
provide key solutions to de-carbonize the construction industry. The combined
companies are present in all main geographies and benefit from two highly
complementary footprints, with Chryso's strong positions mostly in Europe,
Middle East and Africa and GCP's in North America, Asia-Pacific and Latin
America. The combination will also enlarge Saint-Gobain's customer reach in
admixtures and additives with 75 production sites and a doubling of its
manufacturing footprint to 38 countries.

 

·      The acquisition of GCP enriches the CertainTeed portfolio in
North America in the residential as well as the commercial sectors, in
addition to its strong presence in infrastructure. It enhances its ability to
provide a wider customer base with innovative solutions and develop roofing
and façade systems. GCP's recognized high-end innovative solutions will
complement the CertainTeed portfolio with their leading presence in roofing
underlayment (Ice & Water Shield(®)) as well as in waterproofing
(Preprufe(®), Bituthene(®)). It will offer multiple cross-selling
opportunities, improving performance for customers and accelerating growth.

 

Operational Improvement Plan

 

·      Saint-Gobain has the levers to significantly improve GCP's
performance. GCP is in the process of implementing a turnaround plan to
improve growth and margins: many initiatives have been put in place including
a refreshed leadership team, customer experience improvement and an ongoing
cost rationalization plan (e.g. the relocation of headquarters), which are
expected to deliver run-rate cost savings of c. $20 million. Saint-Gobain has
well-identified levers to significantly accelerate the improvement in
performance, such as its experienced and stable management with deep
expertise, its ability to attract and retain talent, robust sales processes
targeting an enriched value proposition, scale to accelerate innovation in
order to better serve customers and develop value-added offerings, solid and
detailed cost synergies with CertainTeed and Chryso (including on raw
materials purchasing and vertical integration of polymers production) as well
as various cross-selling opportunities.

 

Integration within Saint-Gobain

 

·      The specialty building materials business in North America (c.
$250 million of sales) will be integrated into the CertainTeed business
serving local customers in the Americas Region. All other businesses,
consisting of mainly concrete admixtures and cement additives (c. $750 million
of sales) will be combined with the Chryso business and be part of the High
Performance Solutions segment.

 

Value Creation & Synergies

 

·      A value-creative transaction for Saint-Gobain's shareholders with
significant synergies. This acquisition will create value by year 3 following
the closing of the transaction. Saint-Gobain will finance the acquisition
through cash on its balance sheet. Significant synergy opportunities are
estimated at c. $85 million by year 5, including cost synergies of c. $72
million which are expected to be captured through the elimination of GCP's
public company costs, pruning of SG&A, economies of scale in procurement,
and manufacturing and logistics cost optimization. Saint-Gobain expects to
benefit from at least $13 million EBITDA impact from top-line synergies
thanks to an enlarged commercial platform to the benefit of its customers and
cross-selling opportunities in multiple geographies.

 

 

Simon Bates, President and Chief Executive Officer of GCP, commented:

"Today opens an exciting new era in GCP's rich history, for our shareholders,
customers and employees. We are thrilled for GCP to join Saint-Gobain, the
ideal strategic partner to support our growth. Thanks to its global platform,
significant resources as well as commercial and innovation expertise,
Saint-Gobain is perfectly positioned to ensure the success of GCP's
operations and people over the long term."

Peter Feld, Independent Chair of the Board of GCP, added:

"The Board of GCP is unanimously supportive of this transaction and believes
it provides full and fair value to all shareholders of GCP. Saint-Gobain
represents a great partner for GCP and we are pleased to have reached this
agreement. The Board would like to thank our leadership team and our dedicated
employees for their significant contributions to GCP. These efforts have
allowed us to achieve this great result."

 

Benoit Bazin, Chief Executive Officer of Saint-Gobain, commented:

"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. We are
very happy and truly excited to welcome into Saint-Gobain the GCP teams, with
whom we share the same industrial and commercial culture. Given GCP's
leadership in its sector with well-recognized brands, expertise, know-how and
businesses that are highly complementary with Chryso and CertainTeed, we are
convinced that this great combination will create a very strong platform, with
improved reach, value added solutions and services delivered to our customers.
Leveraging Saint-Gobain's scale and innovation capabilities, with GCP's
attractive geographic footprint, this transaction will result in enhanced
profitable growth and value creation for our shareholders and will provide
attractive development opportunities for both teams around the world."

 

 

Lazard and Citi are acting as financial advisors, and Freshfields Bruckhaus
Deringer LLP is acting as legal counsel to Saint-Gobain in connection with the
transaction.

 

 

 

Analyst/Investor Conference Call on December 6, 2021 at 8:00 a.m. Paris time
(GMT + 1)

Dial-in: + 33 1 72 72 74 03 or +44 20 7194 3759 (code 99461838#)

Please dial in 5 to 10 minutes prior to the scheduled start time

Replay: +33 1 70 71 01 60 or +44 20 3364 5147 (code 425016453#) from 10:30
a.m. Paris time until January 31, 2022.

 

A presentation regarding the transaction will be available before the
conference call on

Saint-Gobain's website at:

https://www.saint-gobain.com/en/finance/financial-events
(https://www.saint-gobain.com/en/finance/financial-events)

 

 

 

 

ABOUT SAINT-GOBAIN

Saint-Gobain designs, manufactures and distributes materials and solutions for
the construction, mobility, healthcare and other industrial application
markets. Developed through a continuous innovation process, they can be found
everywhere in our living places and daily life, providing wellbeing,
performance and safety, while addressing the challenges of sustainable
construction, resource efficiency and the fight against climate change. This
strategy of responsible growth is guided by the Saint-Gobain purpose, "MAKING
THE WORLD A BETTER HOME", which responds to the shared ambition of all the
women and men in the Group to act every day to make the world a more beautiful
and sustainable place to live in.

 

€38.1 billion in sales in 2020

More than 167,000 employees, located in 72 countries

Committed to achieving Carbon Neutrality by 2050

 

For more information about Saint-Gobain

visit www.saint-gobain.com (http://www.saint-gobain.com) and follow us on
Twitter @saintgobain

 

 

 Analyst/Investor relations                   Press relations

 Vivien Dardel           +33 1 88 54 29 77    Patricia Marie              +33 1 88 54 26 83

 Floriana Michalowska    +33 1 88 54 19 09    Bénédicte Debusschere       +33 1 88 54 14 75

 Christelle Gannage      +33 1 88 54 15 49    Susanne Trabitzsch          +33 1 88 54 27 96

 

 

Important disclaimer - forward-looking statements:

This document contains forward-looking statements with respect to the
financial condition, results, business, strategy, plans and outlook of
Saint-Gobain, GCP Applied Technologies Inc. ("GCP") and the combined company
that will result from the completion of the pending acquisition of GCP by
Saint-Gobain (the "Merger"), the agreement providing for the Merger (the
"Merger Agreement"), and the Merger transaction. Forward-looking statements
are generally identified by the use of the words "expect", "anticipate",
"believe", "intend", "estimate", "plan" and similar expressions. Although
Saint-Gobain believes that the expectations reflected in such forward-looking
statements are based on reasonable assumptions as at the time of publishing
this document, investors are cautioned that these statements are not
guarantees of future performance, results or occurrences. Actual performance,
results and occurrences may differ materially from the forward-looking
statements as a result of a number of known and unknown risks, uncertainties
and other factors, many of which are difficult to predict and are generally
beyond the control of Saint-Gobain, including but not limited to the risks
described in the "Risk Factors" section of Saint-Gobain's Universal
Registration Document available on its website (www.saint-gobain.com
(http://www.saint-gobain.com) ) and the following factors: the occurrence of
any event, change or other circumstances that could give rise to the
termination of the Merger Agreement; the inability to complete the Merger due
to the failure of GCP to obtain stockholder approval for the Merger or the
failure to satisfy other conditions to completion of the Merger; risks related
to disruption of GCP's and our management's attention to ongoing business
operations due to the Merger; the effect of the announcement of the Merger on
our or GCP's relationships with customers, operating results and business
generally; the risk that the Merger will not be consummated in a timely
manner; the risk that, in order to obtain regulatory clearances, there are
material adverse remedies imposed on the combined company by regulatory
authorities, including conduct remedies and divestitures; the inability of the
combined company to realize synergies, to retain employees and to successfully
integrate following the Merger; and the risks of adverse developments relating
to GCP, its business or operations as more fully disclosed in GCP's filings
with the US Securities and Exchange Commission (and available at www.sec.gov
(https://urldefense.proofpoint.com/v2/url?u=http-3A__www.sec.gov&d=DwMF-g&c=tkg6qBpVKaymQv9tTEpyCv5e23C4oKrSdZwjE7Q68Ts&r=b0K6V1wkcdptC7RmMFTs3b8cYgTOw_6JwiCGOKx90Z8&m=x5BKb2j6zb86jllN4w1J0kSJcd0wbkKq6flPUmb_5Tc&s=trSI8RNYA84fwB0ZMuqptjAyc3i5Vcn5gGDdSo9lg5A&e=)
), including in the risk factors in GCP's last annual report on Form 10-K.
Accordingly, readers of this document are cautioned against relying on these
forward-looking statements. These forward-looking statements are made as of
the date of this document. Saint-Gobain disclaims any intention or obligation
to complete, update or revise these forward-looking statements, whether as a
result of new information, future events or otherwise. This document does not
constitute any offer to purchase or exchange, nor any solicitation of an offer
to sell or exchange securities of Saint-Gobain or GCP.

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