French glassmaker Saint-Gobain bought a piece of Britain“s consolidating building materials industry, picking up Meyer International for UK 1.04 billion (US$ 1.68 billion).
Known for its flat glass …
French glassmaker Saint-Gobain bought a piece of Britain“s consolidating building materials industry, picking up Meyer International for UK 1.04 billion (US$ 1.68 billion). Known for its flat glass and insulation, Saint-Gobain said it was paying 515 pence for each Meyer share. The shares rose around 17% to 500 pence at 1020 GMT. Meyer, which acquired Harcros in 1997 and Graham Group last year, is one of the UK“s largest builder“s merchants, supplying timber and building products mainly to small jobbing builders and contractors. It also one of Britain“s largest tool hire operators with Jewson, which has a network of 174 outlets. Apart from giving Saint-Gobain a strong UK base, the acquisition would push it into the laminates market in North America and in the building materials market in Ireland and the Netherlands. These operations would join Saint-Gobain“s Point-P and Lapeyre divisions, boosting the French group“s ambitions to expand more widely in Europe. “This combination has a compelling industrial logic and we are confident and enthusiastic about its future,” said Jean-Louis Beffa, chairman and chief executive of Saint-Gobain. He added that the deal would enhance his group“s earnings one year after the deal and would clearly create value in the third year. The French multi-national is securing a Euro 2 billion loan to fund the acquisition, which industry sources said was being arranged by Banque National de Paris and Chase Manhattan Bank. Saint-Gobain was buying stock in Meyer on the stock market through brokers ABN Amro. Dealers said it was seeking about 30% of the company. The takeover comes at a time when most of Britain“s building materials sector is struggling to maintain margins and acceding to takeovers. Another British company, Blue Circle Industries Plc, was facing a hostile bid from French company Lafarge on Tuesday at 3.4 billion pounds. In the last six months, cement maker Rugby Group Plc was taken over by RMC Group Plc while Anglo American Plc made an agreed bid for Tarmac Plc. One banker said that Hanson Plc, which last year paid US$ 2.54 billion for Australia“s Pioneer, could be on the lookout soon to further bolster its operations in the UK and Europe. Meyer“s buyout comes at a time when some analysts have been disappointed with its growth rate, compared with some of its UK competitors like Travis Perkins Plc and Wolseley Plc. The fact that the company was also seen to be dragging its feet on its US strategy was also not liked by investors. Its laminate business in the US was recently facing more pressure on margins in competition with Home Depot. But its recent acquisition of Graham Group in the UK diverted its attention. Beffa said it would first examine the US operations before taking a decision on its fate.