BPB board agrees to £3.9bn deal

BPB board agrees to £3.9bn deal
Published: 18 November 2005

British plasterboard maker BPB was last night recommended a 775p-a-share offer from French suitor Saint Gobain. The £3.9billion deal will mark the end of an increasingly hostile and bitter bid battle that started in July this summer at 675p a share. It makes BPB the latest British company to fall to a foreign takeover, with major financial shareholders in BPB said to have pushed management to accept the offer.

Last night’s offer is 55p-a-share, or £270m, more than the 720p-a-share hostile bid that BPB rejected in August on the grounds that it "substantially undervalued" the British group, and a 51 per cent premium to the pre-bid share price. Only last week the group’s chairman, Sir Ian Gibson, insisted an offer needed to be pitched at 832p-a-share if it was to match the premiums paid for other UK building materials companies.

The deal leaves Hanson, the No 1 supplier of sand and gravel for buildings, as Britain’s last big international building materials maker not in foreign hands or under bid. In January, Holcim bought Aggregate Industries. In 2004, Cemex acquired RMC Group, the world’s biggest concrete company. Lafarge SA bought British cement maker Blue Circle Industries in 2001. Meanwhile, British construction glassmaker Pilkington is under offer by Nippon Sheet Glass Co. of Japan.

After months of rejecting successively higher bids from the French firm, and amid increasing hostility between the two sides, the BPB board finally agreed a price after hours of talks. If BPB had not been so steadfast, it is believed Saint Gobain would only have offered 760p a share. The figures also underline why the French group was keen to move quickly. It is thought to be averse to finding itself in a similar position to Lafarge, which took over cement group Blue Circle in 2001. Lafarge failed with its first bid and had to return with a significantly higher offer. In these rising markets, the deal needed to be struck now.

The shareholder register shows that the top investors in the UK plasterboard maker include M&G, HBOS, Barclays Global Investors, Standard Life and Legal & General. Hedge funds are believed to own roughly a quarter and are likely to have been instrumental behind the scenes in pushing the deal through.

The purchase would boost earning more than 10 per cent in the first year Saint-Gobain chairman and chief executive Jean-Louis Beffa said during a conference call.  The purchase will be financed by a syndicated loan arranged by Saint-Gobain’s bank advisers BNP Paribas SA and UBS Investment Bank.   Beffa said the company was comfortable with its debt levels but added that it was likely to divest assets to raise money and improve its portfolio of businesses.  "Not only marginal assets, we could sell some significant businesses but only at a high price," Beffa said, but declined to elaborate further.