June 28 (Bloomberg) -- Forbo Holding AG abandoned a sale of the remnants of its adhesives business after the Swiss maker of floor coverings ended talks with potential suitors.
Forbo evaluated strategic options and pursued talks with interested parties in the business, which had annual sales of 100.4 million francs ($104 million) last year, the company said today in a statement. It plans to keep construction adhesives over the long term, said Karin Marti, a spokeswoman for the Baar-based manufacturer.
Chief Executive Officer This Schneider has largely dismantled the bonding division by selling an industrial adhesives unit to H.B. Fuller Co. in March for 370 million francs and reducing the workforce to 270 from 1,400. The CEO decided that having construction glues within the flooring business is the best way forward, though the matter could be revisited, Marti said.
“Strategically it’s wrong to keep the adhesives business as scale is missing and investments are probably required,” Serge Rotzer, an analyst at Bank Vontobel in Zurich, said in a note to clients. “Better times should probably come back for a disposal.”
Forbo’s shares dropped as much as 4.3 percent to 542.5 Swiss francs, the lowest intraday price since Jan. 30. The shares were down 3.2 percent at 3:50 p.m. in Zurich.
Forbo initiated a structured sale process in February with Credit Suisse as financial adviser and Baker & McKenzie as legal adviser. Marti declined to provide information on the bidders. Credit Suisse also advised Forbo on the HB Fuller deal.
Adhesive makers are consolidating to build scale and expand operations globally, with Henkel AG agreeing last month to buy an adhesives operation from Cytec Industries Inc. for $105 million.
An additional litmus test to gauge investor interest in construction chemicals will be Wendel SA’s possible sales of its aluminates and admixtures units, valued at a potential 1 billion euros ($1.24 billion). Sale processes are continuing, people with knowledge of the situation have said.
The main markets for Forbo’s construction adhesives unit are the Benelux region, Germany, Russia and eastern Europe. Production facilities are located in the Netherlands, Germany and Russia, Forbo said.
“We see a good potential of stepping up cooperation with the flooring systems division in systems solutions, for example additional flooring-related equipment and accessories,” Marti said.
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