SAINT-GOBAIN FURTHER
STRENGthENS ITS worldwide presence IN CONSTRUCTION CHEMICALS BY
SIGNING A DEFINITIVE AGREEMENT TO ACQUIRE FOSROC, a leading player
in asia and emerging markets
Saint-Gobain announces that it has
entered into a definitive
agreement to acquire FOSROC, a leading privately owned
global construction chemicals player
for $1,025 million (approximately
€960 million) in cash.
Following the acquisitions of Chryso
in 2021, GCP in 2022 and 33 additional acquisitions since 2021,
this move is a new
strategic step in establishing Saint-Gobain's worldwide
presence in construction chemicals, which will have combined sales of €6.2 billion
across 73 countries following the acquisition (pro
forma).
FOSROC is a global construction chemicals player with a
strong geographic footprint in India, the Middle East and
Asia-Pacific in particular. The company is expected to
generate $487 million of
sales and to achieve an EBITDA margin of 18.7% in 2024E.
With 20 manufacturing plants and around 3,000 employees, FOSROC
provides a wide range of technical solutions for the construction
industry, including admixtures and additives for concrete and
cement, adhesives and sealants, waterproofing solutions, concrete
repair solutions and flooring.
The purchase price represents an
acquisition multiple (before synergies) of approximately 11.3x
FOSROC's 2024E EBITDA of $91
million, and a multiple of
approximately 7.1x when
including run-rate synergies of approximately $54 million in year
3.
This acquisition will be fully
financed in cash. The Group will maintain a strong balance sheet with net debt /
EBITDA remaining at the low end of the target range (1.5x to 2.0x)
including the recently announced Bailey and CSR Limited
acquisitions. Closing of the transaction is subject to customary
conditions and is expected in first-half 2025.
A
COMPELLING STRATEGIC RATIONALE
·
A unique
opportunity, fully aligned with Saint-Gobain's strategy to
strengthen its worldwide presence in construction
chemicals, supported by solid
macroeconomic factors including the transition towards low-carbon
concrete. It will complement the Group's worldwide growth platform in
construction chemicals.
·
A highly
complementary geographic profile strengthening Saint-Gobain's
presence in high-growth emerging markets, notably India and the
Middle East. FOSROC's positions in
the Middle East and Asia perfectly complement Chryso's positions
mostly in Europe, Turkey and Africa and GCP's in North America,
Latin America and Asia-Pacific. FOSROC is a leading player in
India, one of the most attractive countries in construction
chemicals worldwide with growth supported by an ambitious
infrastructure plan for the coming decades.
·
A comprehensive
range of solutions with a renowned brand and strong technical
competencies. FOSROC's capabilities
are supported by its trusted brand and its recognized technical
expertise, entrepreneurial spirit and high level of
service.
·
A strong track
record of highly profitable growth and significant outperformance
of its underlying markets. FOSROC
has a strong growth track record with c. 11% sales growth per year
(2021-2024E). The company delivers a superior EBITDA margin - more
than 18% - thanks to a highly experienced management team with a
proven history of success.
·
A value-creative
acquisition for Saint-Gobain's shareholders and customers, with
strong synergy potential. $54 million expected
synergies in year 3 following
transaction close, of which
$39 million are cost synergies which are expected to be
captured through economies of scale in purchasing (including on raw
materials and vertical integration of polymers production),
footprint optimization, SG&A savings and manufacturing and
logistics cost optimization. Saint-Gobain expects to benefit from
at least $15 million of growth
synergies thanks to cross-selling opportunities, combining
the Group's innovation capabilities with Fosroc's strength in
infrastructure, and to its customer relationships. These synergies
will be achieved across Saint-Gobain's worldwide platform in
construction chemicals and will leverage Saint-Gobain's existing
strong presence in the wider light and sustainable construction
sector in India and the Middle East. The acquisition will
create value by year 3
following the closing of the transaction and will be EPS (Earnings
Per Share) accretive from year 1.
The integration will be led by
Thierry Bernard, Chief Executive Officer of Construction Chemicals,
with the experienced team who developed the Chryso business over
many years, managed its integration within Saint-Gobain and who has
piloted its successful combination with GCP since 2022, providing a
high level of confidence in the integration of FOSROC. It will be
consolidated into the High Performance Solutions
segment.
Benoit Bazin, Chairman and Chief Executive Officer of
Saint-Gobain, commented:
"The acquisition of FOSROC is perfectly aligned with our "Grow
& Impact" strategic plan: it is a unique opportunity for
Saint-Gobain to further reinforce its worldwide presence in
construction chemicals, and to strengthen its presence in
high-growth emerging markets, in particular in India and the Middle
East. I am very impressed with FOSROC's leadership, its strategy
and its impressive development, as well as the team's track record
of excellent execution and profitable growth. The combination of
the two groups will allow us to expand our profitable growth
platform in construction chemicals. I am looking forward to warmly
welcoming the FOSROC teams into the Group and I am very confident
about the combination of our joint forces."
Jim
Hay, Chairman of FOSROC, commented:
"Today marks the beginning of an exciting new chapter in the
history of FOSROC. Our focus on delivering the best solutions and
satisfaction to our customers has enabled us to become a leading
player in construction chemicals. I want to thank all our teams for
their outstanding work over many years."
Rob
Bonnici, Chief Executive Officer of FOSROC,
added:
"The opportunity to join Saint-Gobain, worldwide leader in
light and sustainable construction and a global player in
construction chemicals is the perfect next step to enhance our
offer by leveraging Saint-Gobain's innovation and technology in
construction chemicals. I look forward to continuing our growth
journey within Saint-Gobain."