Sika Shares Surge on News of $6 Billion Deal for Rival MBCC
Sika to Buy Construction Chemicals Rival MBCC for $6 Billion
(Bloomberg) -- Sika AG has agreed to buy German rival MBCC Group for 5.5 billion francs ($6 billion), allowing the Swiss building materials company to broaden its product range.
Shares in Sika surged nearly 12%, the most in more than a year. They were up 8.5% at 10:40 a.m. in Zurich.
Private equity company Lone Star Funds is selling the business formerly known as BASF Construction Chemicals. The acquisition will boost Sika’s earnings per share from the first year after completion, according to a statement on Thursday.
Sika, which makes sealants, mortars and other building adhesives, said the price is 11.5 times expected 2022 earnings before interest, taxes, depreciation and amortization. Synergies are forecast to reach 160 million francs to 180 million francs.
“Based on Sika’s strong track record regarding the integration of acquired businesses, we believe that also this deal will create substantial shareholder value,” Vontobel said in a note to clients.
Sika Chief Executive Officer Thomas Hasler has been tapping emerging trends around sustainability and the shift toward electric vehicles, which require updated materials. MBCC is active in decarbonization.
What Bloomberg Intelligence Says:
Sika has again surprised positively with an M&A move that’s set to strengthen its global competitiveness. The acquisition of MBCC Group for an enterprise value of 6 billion Swiss francs is a fair price and may allow synergies above the target.
Sika´s Acquisition of MBCC Group Denotes Another Big Step: React
Sonia Baldeira, BI building-materials analyst
“If successful, Sika’s global market share will jump toward 20% with very positive operational leverage and margin effects,” Baader Helvea analyst Markus Mayer said.
Billionaire John Grayken’s Lone Star Funds agreed to buy MBCC from chemicals giant BASF SE for 3.17 billion euros ($3.6 billion) in 2019.
Sika expects to complete the purchase, financed by bridge loan facility, in the second half of next year.
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