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Sika has to buy the newly won freedom of animals

The Zug-based construction chemicals group Sika accepts that the settlement with the Burkard family and the French competitor Saint-Gobain will lead to a significant deterioration in the balance sheet.

Dominik Feldges

  "But it was worth it," said Hälg in his conviction. The Chairman of the Board predicted that, from 2013, Sika would have added more value to shareholders than their main competitors. (Photo: Walter Bieri / EPA)

"But it was worth it," said Hälg in the tone of his deep conviction. The Chairman of the Board predicted that, from 2013, Sika would have added more value to shareholders than their main competitors. (Photo: Walter Bieri / EPA)

The joy of resolving the legal conflict with the Burkard family and the French building material group Saint-Gobain was written in the face of the Sika leadership. "We are very pleased with the outcome," says the brilliant chairman Paul Hälg at a media conference held by the Zug-based building chemicals group in Zurich. Hälg and the referring CEO Paul Schuler repeated several times that the dispute lasted for three and a half years and had been equivalent to fatigue.

Many winners

"But it was worth it," said Hegg in conviction. The chairman of the board predicted that, despite the recent years, Sika would have generated significantly more value for its shareholders from 2013 than the top ten competitors. Including price gains and dividends, it has increased by about 270%, which is three times the average for its major competitors. Their shareholders could have increased their use over the past five years, with an average of only 90%.

The impressive performance of the Sika Group in the stock market was, however, the key prerequisite for the boar finally finding a friendly solution. Saint-Gobain originally planned to take over the Schenker-Winkler-Holding (SWH) vehicle in December 2014, where the Burkard family raised its share in Sika at 16.1% of the capital, or 52.4% of the votes. Due to the legal dispute, the transaction was blocked.

Due to the complex agreement reached by the Group with the other interested parties, it has to give the Burkard family an increase of CHF 500 million due to the recently agreed sales price of CHF 3.22 billion. At the same time, benefit from a premium of almost 800 million CHF in connection with the direct sale of a part of the acquired Sika securities to Sika. This is higher than the market price on May 4, 2018 – the closing price for the previous week. After deduction of all costs, this resulted in payment of 600 million euros, said the leadership of Saint-Gobain, who was also pleased on Friday.

Sika pays for own shares acquired by the French company, which corresponds to 6.97% of the capital and / or equity 23.7% of the votes, a total of 2.08 billion CHF. The associated costs will primarily be covered by bridge funding from UBS. It will later be refinanced by issuing bonds and similar instruments. The company, which reported a solvency ratio of almost 59% and net cash of almost 300 million CHF at the end of 2017, accepts a significant deterioration in the quality of the balance sheet. According to the Chairman of the Board, Hälg, the degree of self-financing is more than halved with the decrease to 25% and new net debt will be approximately twice the operating cash flow (Ebitda).

The Sika management rushed to emphasize that due to large liquid funds, the debt ratio will decrease rapidly and may continue to be rated investment class. As a result, it was not questioned that additional acquisitions could be given.

Hälg and CEO Schuler, who seemed very self-assured at the media conference and in places even allowed a triumphant undertones, underlined in the acquisition strategy to get another nail. Because of the dispute with Saint-Gobain, had to postpone various projects on the baker's burner. Employees could now swarm and look for overtaking candidates who generated between 300 million CHF and 500 million CHF, or even more per year, Schuler said.

As regards the remaining 10.75 percent of the shares in Saint-Gobain in Sika, the management of the zug-based company appears to be assuming that the French group will sell it soon after the agreed two-year period. But the Saint-Gobain group, like the Burkard family, was not represented at Sika's media conference, said elsewhere that they had no schedule and kept open all opportunities.

The agreement between the two companies also says that Hälg, who simultaneously describes Saint-Gobain as "one of the company's largest customers", says they work together on an industrial scale. However, the Sika Group does not want to see its new majority shareholder represented on the Board. This does not work, because Saint-Gobain is also always a competitor, says Hälg.

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