(BN) Holcim May Need Sweetener to Cement Lafarge Merger: Real M&A


Holcim May Need Sweetener to Cement Lafarge Merger: Real M&A
2015-03-01 23:01:00.2 GMT


(For a Real M&A column news alert: SALT REALMNA <GO>.)

By Aaron Kirchfeld, Francois de Beaupuy and Jan-Henrik Förster
(Bloomberg) -- The merger of equals between cement giants
Holcim Ltd. and Lafarge SA is looking increasingly unequal to
some Holcim shareholders. It may take sweetened terms or cash to
keep them happy.
Since announcing the combination in April to create the
world’s biggest cement maker with about $40 billion in sales,
Swiss firm Holcim has outperformed its French partner Lafarge,
on average, in sales performance, profit and cash from
operations, according to data compiled by Bloomberg.
The gap between the two companies is fueling concern about
the deal’s structure among Holcim investors including Eurocement
Holding AG, the company’s second-largest shareholder, according
to people familiar with the matter. Pressure is rising for
Holcim to renegotiate the 1:1 share-exchange ratio, pay out cash
to investors or even reconsider the deal as a whole, the people
said.
“Holcim shows a better operational performance than
Lafarge since the proposed merger was announced,” said Rocchino
Contangelo, a fund manager at Zurich-based Swisscanto, which
owns shares in Holcim. “Some investors think that this better
operational performance should be reflected in the terms of the
deal.”
Contangelo said his firm hasn’t decided if it will back the
merger.

Exchange Disadvantage

The exchange ratio is a disadvantage for Holcim
shareholders, and the Swiss firm’s outlook on a stand-alone
basis would be better, according to a Swiss shareholder with
about 1 percent of Holcim, who asked not to be identified
publicly criticizing the deal.
To placate shareholders, Holcim and Lafarge are considering
paying a special dividend after agreeing to sell assets to CRH
Plc for 6.5 billion euros ($7.3 billion) to address antitrust
hurdles, according to two people familiar with the discussions.
Lafarge Chief Executive Officer Bruno Lafont said on Feb.
18 that the merged companies would aim to boost return to
shareholders rather than make new acquisitions.
Eurocement, which is owned by Georgia-born Filaret Galchev
and holds a 10.8 percent stake in Holcim, is also reviewing the
terms of the deal amid shareholder concern and plans to
communicate its stance in the coming weeks, according to two
people. Other smaller shareholders are also pushing for a change
in the exchange ratio or a special payment, they said.

No Change

Peter Stopfe, a spokesman for Jona, Switzerland-based
Holcim, said “the state of affairs remains unchanged” and that
there’s no mechanism to automatically adjust the exchange ratio.
He said the company will meet “all relevant shareholders”
during investor roadshows. Christel des Royeries, a spokeswoman
for Paris-based Lafarge, referenced comments from CEO Lafont,
who said the exchange ratio is “set by contract, and reflects
long-term prospects of the two companies.”
Representatives for Eurocement didn’t respond to requests
for comment sent by phone and e-mail.
For the merger to go through under its current terms, at
least two-thirds of Holcim shareholders still must approve a
capital increase. They’ll vote on it at an extraordinary meeting
that’s expected to be held in the first half after the company’s
annual meeting due April 13.
The agreed breakup fee of 350 million euros would be
annulled if Holcim shareholders vote down the transaction,
according to a person familiar with the matter.

Deal Logic

Holcim and Lafarge agreed to merge last year to unite
operations after the global recession eroded demand for building
materials, and as increased competition from emerging-market
rivals undermined profits. The companies expect the combination
to generate synergies of more than 1.4 billion euros.
While both Holcim and Lafarge have been experiencing
declining revenue and cash flow, Holcim’s have had less of a
slide since the deal was struck, on average. And Holcim’s Ebitda
margin -- or the earnings before interest, taxes, depreciation
and amortization it reaped on sales -- exceeded Lafarge’s in the
period, on average. That said, Lafarge led Holcim by that
measure during the six quarters before the deal was announced.
“Holcim’s fourth-quarter publication was good, Lafarge’s
less so,” Gaetan Dupont, an analyst at AlphaValue in Paris,
said in an e-mailed response to questions. Still, “the track
records of Lafarge and Holcim in the past two to four years
clearly show that Lafarge has been rather better managed than
Holcim, so it seems very unlikely that the deal is detrimental
to either of the companies.”

Valuation Gap

Even so, Holcim’s valuation has come under pressure. Before
the two agreed to combine, they had roughly the same ratio of
enterprise value to earnings before interest, taxes,
depreciation and amortization. Now, Holcim trades for just 9.7
times Ebitda, a 27 percent discount to Lafarge’s multiple, data
compiled by Bloomberg show.
Holcim’s valuation may be down in part because its
shareholders see less to gain in a deal. The stock was also
among a group of Swiss equities that took a hit this year after
the nation’s central bank allowed its currency to appreciate.
The company’s stock prices reflect some expectations that
the merger terms may be adjusted in Holcim’s favor, though only
a small probability, according to a Feb. 26 note by Patrick
Appenzeller, an analyst at Baader-Helvea in Zurich.
“We believe that the probability is much higher, based on
the changed fundamental outlook for the companies,” Appenzeller
wrote. He recommends that investors sell Lafarge shares and buy
Holcim’s. “Why should Holcim investors agree to such a bad
deal?”

For Related News and Information:
Lafarge Forecasts 2015 Profit Gains as Cement Markets Revive
CRH Buys Cement Assets From Holcim-Lafarge for $7.3 Billion
Holcim and Lafarge Managers Have Equal Billing in Merged Board
Holcim earnings graph: HOLN VX <Equity> FA ISBAR <GO>
Holcim enterprise value: HOLN VX <Equity> EV <GO>
Top Swiss stories: TOPS <GO>
Bloomberg Intelligence building-materials: BI BMATG <GO>
Top deal news: DTOP <GO>
Real M&A columns: NI REALMNA <GO>

--With assistance from Tara Lachapelle in New York.

To contact the reporters on this story:
Aaron Kirchfeld in London at +44-20-3525-8830 or
akirchfeld@bloomberg.net;
Francois de Beaupuy in Paris at +33-1-5365-5051 or
fdebeaupuy@bloomberg.net;
Jan-Henrik Förster in Zurich at +41-44-224-4116 or
jforster20@bloomberg.net
To contact the editors responsible for this story:
Beth Williams at +1-212-617-2307 or
bewilliams@bloomberg.net;
Simon Thiel at +44-20-3525-2814 or
sthiel1@bloomberg.net
Elizabeth Wollman

(BN) Buffett Critiques Breakup Ideas Even as Spinoffs Surge: Real M&A


Buffett Critiques Breakup Ideas Even as Spinoffs Surge: Real M&A
2015-03-01 23:37:19.403 GMT


By Tara Lachapelle
(Bloomberg) -- Warren Buffett’s criticism of spinoffs is
creating a rare instance where investors may clash with the
Oracle of Omaha.
The world’s second-richest man devoted a chunk of his
annual letter to Berkshire Hathaway Inc.’s shareholders to
defending the company’s conglomerate structure. He denounced the
deal cycle in which a fee-hungry “banking fraternity” urges
acquisitions, only to later encourage their undoing for the sake
of “unlocking shareholder value.”
Spinoffs “make no sense for us,” Buffett wrote in the
letter, which was published on Saturday. Berkshire, as a
collection of businesses and investments, has reaped steady
profit and returns for investors, the letter said.
His remarks follow a record number of the transactions in
the past 12 months, according to data compiled by Bloomberg. The
rationale behind spinoffs is that a unit tucked under a diverse
company’s umbrella may be worth more if it were a separate
publicly traded entity. So far, it’s working: A Bloomberg index
that tracks spinoff stocks produced almost double the gain of
the Standard & Poor’s 500 over the past five years. From Pfizer
Inc.’s former animal-heath business Zoetis Inc. to drugmaker
AbbVie Inc.’s split from Abbott Laboratories, investors have
been cheering the moves -- and calling for more.
“Proof is in the pudding” because spinoff stocks have
“smoked the S&P 500,” said Joe Cornell, an analyst for Spin-
Off Advisors LLC in Chicago. “I expect Warren Buffett, with all
due respect, is talking his book a bit and may wish to dismiss
any dialog about him breaking up the company.”

Berkshire Returns

Buffett, 84, has used acquisitions to build Berkshire into
a $363 billion behemoth with businesses spanning from the
insurer Geico to railroad BNSF and underwear maker Fruit of the
Loom. Its stable of companies also includes See’s Candies and a
utility unit formerly known as MidAmerican Energy.
In the past 50 years, Berkshire shares have appreciated 1.8
million percent. And earnings at businesses other than insurance
and investments have grown about 20 percent a year since 1970,
his letter said.
Given the growing number of activist investors urging big,
diverse companies to narrow their focus, Buffett may be
concerned that there will be calls someday to break up his
empire when he’s no longer running it.
“Buffet is the best capital allocator of all time and his
decentralized conglomerate structure has created tremendous
shareholder value,” said Todd Lowenstein, who helps manage $16
billion at HighMark Capital Management in Los Angeles. “A cynic
might think he planted this controversy as a pre-emptive strike
to preserve his legacy.”

Better Together

Buffett says it would make no sense to break up Berkshire
because its businesses are worth more as part of the
conglomerate than as separate entities. They can enjoy certain
tax benefits, for instance, while saving on regulatory and
administrative costs. He also said that corporate breakups are
often driven by bankers seeking to generate fees.
While investors may agree with him on the first point, many
have been showing support for other companies that are pursuing
splits. A more narrowly focused business is easier for
shareholders to value, said Walter Todd, chief investment
officer at Greenwood, South Carolina-based Greenwood Capital,
which oversees about $1 billion.
“I can understand his dislike for what is perceived as
financial engineering perhaps, but allowing investors to
determine values for more pure-play companies versus
conglomerate-type companies makes some sense,” Todd said.

Cash Advantage

Unlike most conglomerates though, Todd said that at
Berkshire “there is no illusion of some type of combined
synergies between these businesses.” He simply buys companies
he finds attractive and lets managers keep doing what drew him
to them in the first place. And the cash they generate is often
sent to Berkshire headquarters for Buffett to reinvest.
The diverse nature of Berkshire’s businesses also allow
Buffett the “ongoing ability to build value” in a way that
firms that are focused on just one industry can’t, said Tom
Russo, who oversees about $10 billion including Berkshire shares
at Gardner Russo & Gardner.
“The ability to take See’s cash flows and invest in
MidAmerican means that we’ve never really run out of places to
deploy capital in Berkshire,” Russo said in a phone interview.
Since 1992, Berkshire has struck about $170 billion of
acquisitions, according to data compiled by Bloomberg. But it
continues to accumulate cash at a faster rate than Buffett can
invest it.

Breakup Risk

The rise in shareholder activism from investors such as
Carl Icahn could be both good and bad for Buffett. On the one
hand, he says it should create more takeover candidates so that
Berkshire’s $60 billion in cash can “constructively decrease.”
But a future Berkshire under different leadership could itself
become an activist target.
“The biggest risk in Buffett’s mind in terms of the
sustainability” of Berkshire is breaking the company up, said
David Rolfe, who manages about $11 billion including Berkshire
shares at Wedgewood Partners Inc. If the next CEO ever “sends
out a letter to the board saying, ‘I had an interesting
conversation with Carl Icahn,’ that’s his last day as CEO.”

For Related News and Information:
Berkshire Profit Falls 17% to $4.16 Billion on Investments
Buffett Says Next Berkshire CEO Must Fight Arrogance, Decay
Buffett Sees Son Howard as ‘Safety Valve’ If Next CEO Falters
Real M&A columns: NI REALMNA <GO>
Top deal stories: DTOP <GO>

--With assistance from Noah Buhayar in Seattle.

To contact the reporter on this story:
Tara Lachapelle in New York at +1-212-617-8911 or
tlachapelle@bloomberg.net
To contact the editors responsible for this story:
Beth Williams at +1-212-617-2307 or
bewilliams@bloomberg.net
Dan Kraut

WSJ : NXP, Freescale Agree to Merger


NXP, Freescale Agree to Merger
Cash-and-stock deal values U.S. chip maker at $11.8 billion
NXP said it would pay about $36.14 a share in cash and stock for Freescale.

 NXP Semiconductors NV and Freescale Semiconductor Ltd. have agreed to merge in a deal that values Freescale at $11.8 billion and which would create a combined company with a market value of more than $30 billion.

NXP said Sunday night that it would pay about $36.14 a share in cash and stock for Freescale, which represents a narrow premium to its closing price Friday of $36.11 a share. The stock had been buoyed recently by reports about a possible sale of the company.

The deal would give Freescale shareholders about 32% of the merged company. Credit Suisse Group advised NXP on the transaction. Morgan Stanley advised Freescale.

NXP, which is based in the Netherlands, said the merger provides a “clear path” to $500 million of annual cost synergies, with $200 million in cost savings to be realized in the year following the deal’s completion.

The agreement is the latest sign that the mergers-and-acquisitions market, which came roaring back to life in 2014, could be in for another strong year.

Freescale traces its lineage to 1948, when Motorola Inc. created a division in Arizona that would become one of the world’s first semiconductor businesses. The company has recently been best known for products called microcontrollers, and applications for cars, networking and industrial equipment.

Freescale, which is based in Austin, Texas, was spun off from Motorola in 2004 and agreed two years later to be purchased in a $17.6 billion leveraged buyout by private-equity firms Blackstone Group LP, Carlyle Group LP, TPG and Permira.

The company went public again in 2011 in a deal that left Blackstone as its largest stockholder. But the chip maker remained saddled with a heavy debt load, which totaled about $5.6 billion as of Dec. 31. Freescale reported net income of $251 million on net sales of $4.6 billion last year, both improvements from 2013.

NXP was previously the semiconductor arm of the Dutch electronics giant Philips NV. It became independent as part of a 2006 deal in which a private-equity group including KKR & Co., Bain Capital LLC and Silver Lake bought 80% of the business. The group agreed to pay $4.3 billion and assume some $5 billion in debt. The company went public in 2010; the private-equity firms have since sold their stakes.

NXP has a broad array of products and a large business in chips used in cars. It as also been heavily involved with a short-range wireless technology called near-field communications, which has been incorporated into some smartphones for purposes such as mobile payments, a growing field.

 NXP’s revenue rose 17% to $5.65 billion in 2014; its net income rose 55% to $539 million.



WSJ : Fed Ushering in New Era of Uncertainty on Rates (Jon Hilsenrath)

Fed Ushering in New Era of Uncertainty on Rates

Investors are weighing when Federal Reserve will start raising interest rates, but where they end up in long run is also a crucial question

Investors these days are obsessing over when the Federal Reserve will start raising short-term interest rates. Drawing less scrutiny is where rates will end up in the long run and how they’ll get there. But it’s time to start paying attention.

Fed officials have made clear they expect to begin raising short-term interest rates from near-zero this year, though not before midyear. After that, there is great uncertainty at the central bank and in the markets about the future path of interest rates.

The long-run outlook for rates has consequences for everyone. For households, it will determine payments on mortgages and car loans; for businesses, on corporate bonds; and for the government, on the $13 trillion in debt held by the public. A disconnect between the Fed and the market over the long-run rate outlook also could be a source of market turbulence in the months ahead.

Central-bank policy makers on average see rates going nearly twice as high as futures markets indicate in coming years, for a variety of reasons.

If the Fed is wrong, it might make a mistake on interest rates that jars the economy. If the market is wrong, it might be setting itself up for a tumble if rates go higher than expected.

The Fed’s latest forecasts show that nine of 17 policy makers see the central bank’s benchmark interest rate—the federal funds rate—at 1.13% or higher by year-end. The median estimates—meaning half are above and half below—reach 2.5% for the end of 2016 and 3.63% for the end of 2017. On the other hand, in fed funds futures markets, where traders buy and sell contracts based on expected rates, the expected fed funds rate is 0.50% on average in December 2015, 1.35% in December 2016 and 1.84% in December 2017.

One reason for the disparity: Futures prices reflect investors’ calculations that there is some probability rates will return to near-zero after a few increases and stay there.

This happened in Sweden after its central bank raised rates in 2010 and in Japan after 2006. In both cases, the central banks had to reverse course and cut rates after economic shocks and deflation pressures crippled their economies.

A survey by the New York Fed of Wall Street bond dealers in January showed they attached a 20% probability to U.S. short-term rates returning to zero within two years after liftoff.

A return to zero isn’t the Fed’s expected outcome, so it doesn’t show up in its rate forecasts.

Investors might have other doubts about the Fed—that it won’t reach its 2% inflation target and will thus be forced to keep rates low, or that it won’t have the will to carry through on the rate increases it has telegraphed.

The longer-run rate outlook was the center of discussion Friday at a monetary-policy conference sponsored by the University of Chicago Booth School of Business. Fed Vice Chairman Stanley Fischer said there that market expectations might move—perhaps abruptly—closer to the Fed’s when the central bank starts lifting rates. A first increase “will add to the credibility of what we’re saying,” he said in a not-so-subtle warning to investors who doubt the Fed’s plans.

In theory, there is a long-run equilibrium interest rate where the Fed is headed which, as with Goldilocks and her fabled porridge, would leave the economy neither too hot nor too cold. That is, this rate is not so low that it causes inflation to surge but not so high that it holds back growth.

It is also the rate that balances investment and saving. In a period when businesses are reluctant to invest, or when savers are piling money away, the rate is likely to be low.

Economists have been puzzling over this rate, also called the natural rate, for more than a century. “The natural rate is not fixed or unalterable,” Swedish economist Knut Wicksell posited in a famous 1898 book on interest. The problem, he noted, was that it depended on “a thousand and one things which determine the current economic position of a community; and with them it constantly fluctuates.”

Fed officials estimate this long-run rate is now around 3.75%, which amounts to 2 percentage points as compensation for inflation and a 1.75-percentage-point real return on investment. Their forecasts suggest they effectively see themselves getting close to this equilibrium rate by the end of 2017.

Lawrence Summers , Harvard University economics professor, has posited that the equilibrium rate is lower now than in the past because the economy is growing so slowly and real returns have fallen. Fed officials have nudged their estimate down from 4.25% in 2012.

Many investors have doubts about the Fed’s forecasts. Meanwhile, many economists and Fed officials don’t see eye to eye with Mr. Summers on his theory that a new era of “secular stagnation” in the economy has substantially lowered the equilibrium interest rate.

“We are skeptical of the secular stagnation view,” concluded a paper presented at the Booth conference. Like many Fed officials, the authors— James Hamilton of the University of California, San Diego; Ethan Harris of Bank of America ; Jan Hatzius of Goldman Sachs and Kenneth West of the University of Wisconsin—concluded the economy has been held back by temporary headwinds and not a permanent reduction in its potential growth rate.

Given all the uncertainties about growth and inflation, Fed officials will have to feel around for the right long-run interest rate like a person in the dark.

“I don’t think that is a question we can answer right now,” Mr. Fischer said of the long-run rate.

The uncertainty means an important change in central-bank tactics is coming. For a decade now, Fed officials have used various ways to give investors “forward guidance” about where interest rates are going.

In their latest guidance, Fed officials said they would be “patient” before starting to raise rates, meaning no rate increase is likely at their next two policy meetings. They are now moving away from this guidance.

It appears investors are going to find themselves doing a lot of guesswork about the path of rates after they start rising this year, along with the Fed itself.

>>> Fosun backs USD 500m bid from Bert Cooper for Afren

Fosun backs USD 500m bid from Bert Cooper for Afren 

Fosun, a Chinese conglomerate controlled by the Chinese businessman Guo Guangchang, is backing a USD 500m (EUR 446m) bid for Afren headed by the UK-listed oil company’s co-founder Bert Cooper, The Sunday Times reported. The newspaper did not cite a source for the claim.

The China-Africa Development Fund is also backing Cooper’s proposal, the item said.

Cooper and the Chinese groups would take a majority stake in Afren but would keep its stock exchange listing, the article continued. However, the report said the bid stands little chance of success, as Afren’s lenders are in control of the company and have put together a rescue deal of their own.

As previously reported, Blackstone is advising a committee representing 40% of the USD 860m of Afren bonds.

The California-based investment firm Pimco and Ashmore, a UK-based fund manager have proposed a USD 300m deal that would avert putting Afren into administration but would leave the company’s shareholders with nothing, the report continued. It is understood that the deal involves swapping debt for equity, giving Pimco, Ashmore and other bondholders a majority stake in Afren, the newspaper said.

Under Cooper’s proposal, Afren’s lenders would need to accept a substantial haircut on their bonds, the report said. However, it is thought that those lenders would prefer to recapitalize Afren themselves rather than take a loss, the item added.

The report noted that an extension to a repayment on USD 50m of Afren debt expired on Friday, 27 February.

Afren’s market capitalisation stood at GBP 95.3m at the close of trading in London on Friday.
Sunday Times

>>> IAG CEO to hold meetings with Irish government, unions in attempt to salvage

IAG CEO to hold meetings with Irish government, unions in attempt to salvage Aer Lingus takeover
International Consolidated Airlines Group (IAG) chief executive Willie Walsh will hold meetings with the Irish government and unions regarding its bid for Aer Lingus next week, the Financial Times reported. Walsh yesterday, 27 February indicated that he was not admitting defeat in IAG’s bid for the listed Irish airline and that he would hold meetings with trade unions and a review panel of the Irish government following his return from a presentation to investors, the item said.

The Irish government, which holds a 25% stake in Aer Lingus, said on Wednesday that it would want further assurances regarding employment and growth before it would consider selling its stake in the flag carrier. The government is particularly insistent on securing guarantees from IAG that it would retain its slots at Heathrow airport for Irish routes over and above the five year commitment offered by IAG, the item noted.

Walsh this month informed the Irish government that he would not extend the five year guarantee on Heathrow slots. The CEO said IAG was preparing a response to the Irish government’s demands, the article said. Walsh would not rule out making concessions, the item added.

Analysts cited by the newspaper said the Irish government is looking for a guarantee of up to 10 years on Aer Lingus’ slots at Heathrow. However, IAG would find it difficult to justify such concessions on commercial grounds, the analysts added.

One analyst cited by the report argued that the impasse could be broken by concessions on landing charges at the Irish airports that are most concerned about losing connections to Heathrow. However, it is more likely that IAG could provide more clarity on employment at Aer Lingus and expansion of transatlantic routes, while giving non-binding commitments regarding the Heathrow slots slightly beyond its five year commitment, the analyst said.

The Irish Times reported that Walsh will hold meetings with officials from the Irish Congress of Trade Unions and representatives from the Impact and Siptu unions. The unions are looking for reassurances on employment before they would think about supporting IAG’s bid, the item said.

Walsh, quoted in a report in The Times, said IAG’s proposed takeover of Aer Lingus is not a “must-do” acquisition. Walsh added that IAG would not pay too high a premium for Aer Lingus.

IAG has offered EUR 2.25 per share for Aer Lingus, valuing the airline at EUR 1.36bn (USD 1.52bn). Aer Lingus’ share price closed EUR 0.02 up at EUR 2.255 in Dublin yesterday, giving the airline a market capitalisation of EUR 1.20bn.
Financial Times, Irish Times, The Times

>>> SFR makes EUR 7.5bn offer for Bouygues Telecom, discussions ongoing



SFR makes EUR 7.5bn offer for Bouygues Telecom, discussions ongoing
Bouygues Telecom has been the subject of an offer of up to EUR 7.5bn from competing French telco SFR, according to the Journal du Dimanche.

The French-language weekly newspaper quoted sources it did not identify as saying that while that offer was spurned, SFR could up the ante next year and offer as much as EUR 8bn.

One source close to the bidder camp told the JDD that talks were not over and the issue of pricing remained key. Other sources mooted the likelihood that a better offer might come about within a matter of months.

The information came in the context of expected consolidation within the French telecoms space. Further key factors, according to the JDD, include any plans by Xavier Niel, another high-profile French entrepreneur. According to sources, the founder of Free is content participating in a four-player market. And another element is the planned auction over the next few months of 700 MHz frequencies by the French government. The JDD quoted regulator Sebastien Soriano who said that activity will clearly separate out long-term from short-term players.

As reported by this news service last week, Bouygues Telecom parent boss Martin Bouygues said that despite recent declarations from Altice’s (ATC:AMS) Chief Executive Dexter Goei saying his company would be the most natural buyer for Bouygues Telecom, there were no discussions at all. Altice subsidiary Numericable already paid EUR 3.9bn to acquire SFR from Vivendi.

Bouygues said on that occasion when the dust settles after the telecom wars of the last few years, Bouygues would be best placed to buy one of the French operators, be it Iliad’s (EPA:ILD) Free, Numericable-SFR (EPA:NUM) or Orange (ORA:FP). That is because of its low level of indebtedness which has fallen to EUR 3.2bn in 2014 against EUR 4.435bn in 2013.
Journal du Dimanche

>>> Sika bidder Saint-Gobain not prepared to discuss compromise solutions

Sika bidder Saint-Gobain not prepared to discuss compromise solutions
Sika, the listed Swiss chemicals group, has made compromise solutions to Saint-Gobain in an attempt to resolve the takeover battle, Schweiz am Sonntag reported.

Sika Chairman Paul Haelg told the Swiss Sunday newspaper he has made two suggestions to resolve the situation. The first which would see Saint-Gobain acquire 100% of Sika would be very expensive, therefore, Haelg suggested a compromise solution whereby Sika acquires Sain-Gobain's mortar business. Haelg said Saint-Gobain is not prepared to discuss what he described as constructive suggestions, and has not made any suggestions itself.

Haelg said the Sika and Saint-Gobain mortar businesses are competitors and there would be a conflict of interest should Saint-Gobain allow both to compete under the same roof as it would own 100% in its own unit (operating under the Weber brand) and only 16% in Sika's unit.

Schweiz am Sonntag