REG - Compagnie St-Gobain - Acquisition

Compagnie de Saint Gobain SAAnnouncement

26/02/2024 08:15

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RNS Number : 4294E  Compagnie de Saint-Gobain  26 February 2024

 
SAINT-GOBAIN signs a definitive agreement

TO ACQUIRE CSR LIMITED, establishing a leading position

in light AND sustainable construction in australia

 

 

Saint-Gobain today announces that it has entered into a definitive agreement
with CSR Limited ("CSR") to acquire all of the outstanding shares of CSR by
way of an Australian scheme of arrangement for A$9.00 per share, in cash,
corresponding to an enterprise value of A$4.5 billion (c. €2.7bn) and a net
enterprise value of A$3.2bn (c. €1.9bn) post short to mid-term monetizable
property value of at least A$1.3bn.

 

CSR is a leading building products company in Australia for residential and
non-residential construction with A$2.7bn in total revenue, 30 manufacturing
plants and around 2,500 employees. CSR is a unique opportunity for
Saint-Gobain to establish a leading presence in the attractive Australian
construction market. This acquisition, which is fully aligned with the Group's
vision as the worldwide leader in light and sustainable construction, is a
decisive step to strengthen its presence in the fast-growing markets of
Asia-Pacific.

 

CSR consists principally of Building Products (A$2.0bn sales and 17.7% EBITDA
margin, consensus expected in fiscal year ending March-2024) with Australia's
most trusted and iconic brands that fit extremely well with Saint-Gobain's
worldwide offer on light and sustainable construction. In addition, CSR holds
a Property portfolio which is planned to be monetized in the short to mid-term
for a value of at least A$1.3bn, and an indirect minority participation (~25%)
in an Aluminium business, on which Saint-Gobain will explore its options going
forward.

 

The agreed upon price represents a premium of 33% above the volume-weighted
average price per share for the 1-month trading ended on the undisturbed date
of February 20, 2024, and a multiple (before synergies) of 10.7x analyst
consensus EBITDA for CSR for fiscal year ending March-2024 of A$422 million.
Taking into account the short to mid-term monetizable value of the property
business, it represents a multiple of 7.9x on Building Products consensus
EBITDA for fiscal year ending March-2024 of A$406 million including A$60
million year 3 run-rate synergies.

 

The business combination has been unanimously approved by the Board of
Directors of Saint-Gobain. The Board of Directors of CSR has unanimously
recommended that its shareholders vote in favor of the transaction.

 

Closing of the transaction is subject to, among other things, CSR's
shareholders' approval, necessary regulatory approvals and satisfaction of
other customary closing conditions, with closing expected in the second half
of 2024.

 

This acquisition will be fully financed in cash and is aligned with
Saint-Gobain's financial criteria:

·    Value creation by year 3 following the closing of the transaction and
EPS (Earnings Per Share) accretive from year 1.

·    Maintaining a strong balance sheet and solid credit rating with a
limited impact of ~0.3x net debt / EBITDA.

 

A COMPELLING STRATEGIC RATIONALE

 

·    A decisive step into the very attractive high-growth construction
market in Australia with strong fundamentals, supported by solid macroeconomic
factors including a growing population underpinned by immigration and
increasing needs for light and sustainable construction solutions.

 

·    A comprehensive range of products and solutions for the construction
market with leading brands in interior and exterior solutions. CSR has a
compelling customer offering thanks to an extensive footprint across Australia
with close proximity to its more than 12,000 customers, best-in-class
logistics through 120 hubs and outstanding commercial and technical teams.

 

·    A business operating model similar to Saint-Gobain, offering
integrated solutions delivering sustainability and performance across multiple
product lines through a customer-centric organization. CSR's ongoing
transformation program ("OneCSR") launched in 2020 is well-aligned with
Saint-Gobain's strategy to drive further profitable growth.

 

·    A strong and consistent financial performance: strong sales growth of
8% per annum over 2021-2024E for the Building Products business (more than 6%
over the last 10 years) with over-proportional EBITDA growth of 12%.

 

·    A$60 million expected synergies in year 3 following transaction
close, of which A$50 million are cost synergies coming from operational
excellence (Saint-Gobain best practice sharing on manufacturing, energy
savings and sustainability, supply chain), delisting costs and purchasing, and
at least A$10 million of growth synergies coming from cross-selling
opportunities on additional products with significant upside, such as:
Saint-Gobain's full-range of construction chemicals leveraging GCP's existing
presence in Australia, high-performance glazing and other products that CSR
does not currently offer. Saint-Gobain will also bring its expertise in
process decarbonization, low-carbon offer and other innovative new solutions
to the benefit of Australian customers.

 

 

A WELL-ESTABLISHED RELATIONSHIP THAT WILL FACILITATE A SMOOTH INTEGRATION

 

·    The partnership between CSR and Saint-Gobain, initially based on its
glass wool technology license, has deepened since 2019.

 

·    Similar culture and shared values bode very well for successful
integration, that will also benefit from the mutual respect nurtured over
recent years.

 

·    Since Saint-Gobain is managed by country, CSR will be easily
integrated as one entity representing the Group businesses in Australia and
New Zealand within the Asia-Pacific Region. The Group intends to rely on the
current strong CSR management team, which Saint-Gobain knows well, and is
delivering strong and consistent results.

 

 

 

 

 

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

"I am delighted to announce the acquisition of CSR that represents a decisive
step for Saint-Gobain to establish a leading presence in the high-growth
Australian construction market. It is fully aligned with our "Grow &
Impact" strategy and our vision for worldwide leadership in light and
sustainable construction. We have admired CSR for many years and have
successfully worked together as partners. I am very impressed with CSR's
leadership, the quality of the strategy, and the team's excellent execution of
that strategy. The combination of our joint forces is a fantastic opportunity:
Saint-Gobain will bring significant value to CSR by leveraging our expertise
on the various core segments of CSR's operations for the benefit of its
customers. I look forward to soon welcoming into our Group all CSR employees,
and to continuing the success story in Australia and New Zealand. I am very
confident that this transaction will result in enhanced growth and value
creation for Saint-Gobain shareholders and provide attractive opportunities
for both teams."

 

 

 

 

Analyst/Investor Conference Call on February 26, 2024 at 8:00 a.m. Paris time
(GMT+1)

Dial-in: +44 121 281 8004 or +1 718 705 8796 or +33 1 70 91 87 04

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

Replay: +39 02 802 0987 then press 700724# and 724# from 11:00 a.m. Paris time
until March 26, 2024.

 

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)

 

CSR press release:

www.csr.com.au/ (http://www.csr.com.au/)

 

 

Barclays (in partnership with Barrenjoey for Australia) and Lazard are acting
as financial advisors and Corrs Chambers Westgarth is acting as legal counsel
to Saint-Gobain in connection with the transaction.

 

About Saint-Gobain

Worldwide leader in light and sustainable construction, Saint-Gobain designs, manufactures and distributes materials and services for the construction and industrial markets. Its integrated solutions for the renovation of public and private buildings, light construction and the decarbonization of construction and industry are developed through a continuous innovation process and provide sustainability and performance. The Group's commitment is guided by its purpose, "MAKING THE WORLD A BETTER HOME".
 
€51.2 billion in sales in 2022
168,000 employees, locations in 75 countries
Committed to achieving Carbon Neutrality by 2050
 
For more information about Saint-Gobain, visit
www.saint-gobain.com (https://www.saint-gobain.com/en)
 and follow us on X
@saintgobain (https://twitter.com/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  Laure Bencheikh:              +33 1 88 54 26 38
 Alix Sicaud:           +33 1 88 54 38 70  In Australia

 Erica Borgelt               + 61 413 732 951
 James Weston:          +33 1 88 54 01 24

 

...

 

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, CSR Limited. ("CSR") and the combined company that will result
from the completion of the pending acquisition of CSR by Saint-Gobain (the
"Transaction") and the agreement providing for the Transaction (the "Scheme of
Arrangement"). 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 and the main risks and
uncertainties presented in the half-year 2023 financial report, both documents
being 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 Scheme of Arrangement; the inability to complete the
Transaction due to the failure of CSR to obtain stockholder approval for the
Transaction or the failure to satisfy other conditions to completion of the
Transaction; ; the effect of the announcement of the Transaction on our or
CSR's relationships with customers, operating results and business generally;
the risk that the Transaction will not be consummated in a timely manner; the
inability of the combined company to realize synergies, to retain employees
and to successfully integrate following the Transaction; and the risks of
adverse developments relating to CSR, its business or operations as more fully
disclosed in CSR's filings with the Australian Securities Exchange (and
available at (www.asx.com (http://www.asx.com) ), including in the risk
factors described in CSR's last annual and half-year reports. 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 CSR.

 

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