23
NEW HORIZON
Issue 36 — Welcome, MBCC
Sika has signed a definitive agreement
to acquire MBCC Group, the former BASF
Construction Chemicals, from an affiliate of Lone Star Funds, a global private
equity firm, for a consideration of CHF
5.5 billion (EUR 5.2 billion). MBCC Group
is a leading supplier in construction
chemicals worldwide. The acquisition will
complement and broaden Sika's product
and solution offerings in four of five core
technologies and seven of eight Sika Target Markets and will further strengthen
its geographic footprint. The combined
business will be a key accelerator in
enabling both Sika's and MBCC Group's
customers and the construction industry
to drive the sustainable transformation
further and faster.
MBCC Group, headquartered in Mannheim, Germany, is active in the field of
construction systems and admixture
systems. With approximately 7,500 employees MBCC Group hasoperations in
over 60 countries and more than 130 production facilities. In 2021, the company
is expected to generate net sales of CHF
2.9 billion (EUR 2.7 billion). MBCC Group
has a world renowned product portfolio
of global and local brands which enjoy a
strong reputation for quality and reliability. With its broad and balanced product
offering, MBCC Group participates in all
phases of the construction life cycle and
is a key contributor to the decarbonization of the construction industry.
Thomas Hasler, CEO of Sika: "Two
sustainability champions will join forces. Sika is first in class for sustainable
solutions across the entire construction
industry, and similarly, sustainability
stands at the core of MBCC Group's business. Together we will reinforce our complementary range of products and services across the entire construction life
cycle. With our combined portfolio, we
will enable and accelerate the future of
sustainable construction for the benefit
of customers, employees, shareholders,
and coming generations."
Jochen Fabritius, CEO of MBCC Group:
"We have found a perfect partner who
shares our core beliefs. Sika is wellknown for its entrepreneurial spirit and
its profitable growth strategy,including a
strong acquisition track record. Our products and competencies will again be at
the core of the business. Together with
Sika, we are looking forward to exploring
new and exciting business opportunities.
I would like to thank Lone Star for the
tremendous support during the past few
years and for helping us to prepare for
this next chapter."
The transaction will accelerate Sika's
resilient Growth Strategy 2023 and beyond. Sika will expand its product and
service offering in construction chemicals and industrial adhesives by adding
the highly complementary portfolio of
MBCC Group and is set to reach sales
in excess of CHF 13 billion in 2023. The
combination will lead to a very balanced
product portfolio with all of Sika's Target
Markets achieving between CHF 1 and
2 billion in sales. Customers will benefit
from an enhanced and more efficient distribution network across all construction
markets. Sustainability stands at the
core of both companies. As such, the acquisition combines two highly motivated
and extremely capable global teams that
will support a strong sustainability footprint for the future.Today, 70 percent
of Sika's sales is generated by products
that have a positive effect on sustainability, whereas more than 35 percent
of MBCC Group products are sustainably
advanced. Through the combination, Sika
is committed to generating 80 percent
of its sales from products that positively
impact sustainability.
FINANCIAL PARAMETERS
The complementary operational and
manufacturing footprint of Sika and
MBCC Group is expected to drive attractive integration opportunities, encompassing revenue as well as cost synergies. Annual synergies are expected to
be in the range of CHF 160 - 180 million
by 2025.The purchase price represents a
11.5x EV/pro forma 2022E EBITDA multiple which will come down to 8.5x EV/
EBITDA, including run-rate synergies.
The acquisition is value-enhancing to
Sika shareholders and is expected to be
strongly accretive to Sika's earnings per
share from the first full year post closing.
The financing of the planned transaction
is secured by a bridge loan facility. Sika
remains committed to maintaining a
strong investment grade credit rating
and intends to putin pace a long-term
funding structure comprising a combination of cash-on-hand, bank loans, and
capita markets instruments.
The acquisition is subject to regulatory
approval. Sika is confident it will obtain
all clearances and will actively engage
with the authorities. The closing of the
acquisition is targeted for the second
half of 2022.
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