French glass maker finds British Plaster Board attractive |
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Published
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Fri, 22 Jul 2005 14:35
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LONDON: Global leader in plasterboard British Plaster Board (BPB) reacted with a bit of indifference to news that French glass and building materials firm Saint Gobain might make a takeover offer.
Saint Gobain, who also happens to be a major distributor for BPB in France, confirmed yesterday that it was considering acquisition of BPB and could make a cash offer. It is believed to be interested in distributing the British firm’s products alongside its own. Word got around that the French company was dead serious and financing for the deal had already been arranged. The “news” made BPB share price shoot up 37 percent. It later dropped to close at 648½ that was still 14.5 times forecast earnings.
When asked for comment, BPB said they had not received any proposal from the French company. Shareholders were asked to take no action until a statement was issued.
Most analysts agreed that at closing price BPB would be worth around £3.2billion, but Saint Gobain would still have to begin their offer at 700p-a-share. The proposed acquisition of BPB would be a strategic one for Saint Gobain as the British plasterboard manufacturer enjoys a huge 45 percent share of the European market.
Competing plasterboard manufacturers - Lafarge and Knauf with their 28 percent and 24 percent respectively, are simply not in the reckoning for Saint Gobain. BPB’s global market share is also estimated to be an impressive 20 percent.
The option of looking for acquisitions in its own core business was ruled out as the glass market in Europe has a number of players who would prove to be tough competition for Saint Gobain. That pretty much limited the scope for expansion in the same business.
The business of plasterboard is also acknowledged as highly profitable, with attractive margins like 13 percent; in some markets like the Far East demand is growing at 5 – 6 percent a year. On all counts, BPB appears as not just a value buy but also a great growth investment.
The company’s efficient operations, consistent financial performance and attractive prospects have generated tremendous investor interest and the company now features on the list of FTSE 100. Last year, the company had a turnover of £2.32billion and made a pre-tax profit of £259m. Current year’s earnings are expected around £300.5m.
If this deal comes through, it will be one of many British building materials companies that have been acquired by foreign companies in recent times. RMC, the global leader in ready-mix concrete was bought up for £2.3bn by Mexico’s Cemex in March. Gravel and crushed rock supplier Aggregate Industries was acquired by the Swiss company Holcim in April. In 2001, cement manufacturer Blue Circle was acquired by France’s Lafarge, in the biggest ever deal of the building materials industry.
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