Saint-Gobain Not Obliged to Bid for All of Sika, Court Rules

  • Court upholds opting-out clause in battle over Sika control
  • Ruling by Swiss court is final and cannot be appealed

Cie. de Saint-Gobain SA’s agreed purchase of a minority stake with majority voting rights in Sika AG does not oblige the French building-materials company to make an offer for the remaining shares of the Swiss adhesives maker, according to Switzerland’s Federal Administrative Court.

The ruling is final and cannot be appealed, the court said in a statement Tuesday.

The court’s decision is a setback for minority shareholders such as the Bill & Melinda Gates Foundation Trust who are trying to prevent the French company from using an opt-out clause in Sika’s statutes to avoid making an offer to all investors. Sika’s founding family last year agreed to sell a 16 percent stake with 52 percent of the voting rights to Saint-Gobain.

The ruling confirms decisions made by other authorities. In April, Switzerland’s takeover board said the opting-out clause applies in the case. The country’s financial market regulator later confirmed that ruling, prompting minority investors to lodge an appeal with the Federal Administrative Court.

The Burkard family was the custodian of Sika, a maker of concrete additives and mortars, for more than a century before it struck a deal with Saint-Gobain, Europe’s biggest supplier of building materials, without involving the Swiss company’s executives.

Management and other shareholders left out of the deal are saying it defies commercial sense and could lead the French rival to keep the savings for itself and push costs on to Sika. The Burkards have said that the tie-up between the two companies would create a more competitive new entity and help to cut costs. Saint-Gobain expects the deal to create 100 million euros ($112 million) of synergies in 2017, and 180 million euros from 2019.

Saint-Gobain said Tuesday that the decision further strengthened its determination to go through with the purchase. Sika Chairman Paul Haelg said through a spokesman Tuesday that the key legal issue was not the opting-out clause but whether the voting rights tied to the stake could be limited to 5 percent at shareholder meetings.

Sika had restricted the voting rights of the family at a shareholder meeting this year from 52 percent to just 5 percent, saying it wants to maintain the status quo until pending legal issues have been resolved. At that meeting, the Burkard family failed to oust board members Haelg, Monika Ribar and Daniel Sauter, who had been blocking the sale of the company.

“This decision is further proof that Sika’s positions are untenable under Swiss law,” Urs Burkard, representative of the founding family, said in a statement. “We are very confident that the ill-founded restriction of the voting rights applied by Sika’s board of directors at the last two general assemblies will also be declared illegal.”

Minority shareholders Cascade Investment LLC and the Bill & Melinda Gates Foundation Trust said in an e-mailed statement they will continue to defend their shareholder rights and oppose the “ill-advised planned transaction that was structured to serve only the interests of Schenker-Winkler Holding AG (the Burkard family) and Saint-Gobain.”

The ruling “does not certify the transaction” and Cascade and the foundation will oppose the transaction “until reasonableness prevails, even if that requires a multi-year battle.”

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