SGO Cie de SaintGobain

By Nathan Allen and Alberto Delclaux 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (May 12, 2018).

Compagnie de Saint-Gobain and Sika AG on Friday struck an agreement to end their long-running legal dispute, bringing the French building-material company's pursuit of a controlling stake in Swiss-based Sika to a close.

Under the terms of the agreement Saint-Gobain said it paid 3.22 billion Swiss francs ($3.21 billion) to Sika's founding Burkard family for its Schenker-Winkler Holding AG, which holds a roughly 17% stake in Sika but a majority of the voting rights.

Saint-Gobain subsequently sold about 7% of the equity back to Sika for 2.08 billion Swiss francs and it will retain the remaining 10.8% stake for at least two years, while Sika will have preferential buying rights if Saint-Gobain chooses to sell the stake, the companies said.

Sika will call for an extraordinary shareholders' meeting to propose canceling the recently acquired 7% stake and standardizing voting rights so that one share is equivalent to one vote.

Saint-Gobain-controlled Schenker-Winkler said it would vote in favor of the proposals.

"The board and group management of Sika welcome this positive outcome. This solution is immediately accretive for our shareholders and paves the way for a new chapter of our success story," Sika's Chief Executive Paul Schuler said.

"In our view, the agreement works well for all concerned," says Robert Gardiner of Davy Research.

The resolution leaves Sika free to pursue larger acquisitions, as the Burkard family had previously blocked most efforts at deal making, while several acquisition targets were reluctant to sell as long as the dispute was going on, Mr. Schuler said.

Now the company plans to go after deals in the range of 300 million to 500 million Swiss francs, he added.

The dispute began in 2014 after the Burkard family agreed to sell Saint-Gobain a roughly 17% stake in Sika that came with attached voting rights of 52%, which Sika's management interpreted as a hostile takeover. Following a prolonged legal battle A Swiss court ruled in 2016 that the deal would be unlawful and allowed Sika's management to restrict the family's voting rights.

However, the Burkard family sought to extend its agreement with Saint-Gobain and continued to propose its own candidates to Sika's board. All family board members have now stepped down and Saint-Gobain won't be able to appoint its own candidates, Sika's Chairman Paul Haelg said.

After the shareholders' meeting the voting rights associated with Saint-Gobain's 10.8% stake will be reduced to 10.8% from 23.7%, Sika said.

All pending litigation will be dropped and the two companies plan to extend their existing relationship, Sika said.

(END) Dow Jones Newswires

May 12, 2018 02:47 ET (06:47 GMT)

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