Brexit Gives Standard Industries Chance for Rooftile Empire

  • Braas Monier deal would create company with $5.1 billion sales
  • Standard first secured 29% stake; increased to 40% post-Brexit

The U.K.’s decision to leave the European Union has handed closely held U.S. company Standard Industries Inc. a golden opportunity in the world of rooftiles as it attempts to build a global leader with $5.1 billion in annual sales.

Long keen to gain a foothold in Braas Monier Building Group SA, a German maker of concrete and clay roofing registered in Luxembourg, Standard Industries offered 25 euros ($28.11) a share to a group of financial investors holding 40 percent of the stock. At the time, the group of investors were only willing to sell a 29.1 stake, co-Chief Executive David Winter said in Frankfurt on Thursday.

The result of the June 23 U.K. referendum, held after the agreement on the 29.1 percent stake was signed, changed that as the owners, including Apollo Global Management, TowerBrook Capital Partners and York Capital Management, then also agreed to tender their remaining 10.8 percent stake of Braas Monier’s equity capital, fleeing the market turmoil unleashed by the unexpected result.

“Brexit and everything else that occurred over the summer provided an opportunity for us to reach an agreement about the remaining 10.8 percent stake,” Winter said. “We were interested in the full 40 percent before.”

Shares Soar

Braas shares, which fell 14 percent in the months after the vote through Sept. 13, have soared 19 percent since the German company said on Wednesday that Standard Industries planned to announce a 25 euros-a-share bid for the whole company. Armed with commitments from the hedge funds to tender the remaining 10.8 percent stakeholding, Standard Industries made it official with a public takeover offer valuing the company at 1.87 billion euros, including debt, on Thursday.

Braas shares traded 0.2 percent higher at 25.90 euros at the close in Frankfurt, valuing the company at 1 billion euros. The rooftiler has rejected the bid, saying it contains “no premium for control and significantly undervalues the company and its future prospects.” It advised shareholders to “take no action and await further developments,” in a statement to the stock exchange. Winter said he’ll be satisfied even if Standard Industries ends up with just a 40 percent stake.

The Brexit vote has taken its toll on Braas’s sales, prompting the company to lower its forecast on Aug. 3, when it said revenue will grow just 1 percent this year, compared with a previous forecast for 3 percent growth. It cited lower-than-expected sales in markets including the U.K.

Market Leader

Winter laid out his vision to combine Braas with Standard Industries’ existing activities and create a market leader with more than 15,000 employees and a footprint spanning the U.S. and Europe, at a press conference in Frankfurt.

The product lines and geographies are “largely complementary,” Winter said. The deal “is about growth, not cutting costs or jobs.”

Standard Industries, which in April acquired Danish rooftiles maker Icopal A/S for about 1 billion euros, owns GAF, the biggest maker of commercial and residential roofing in North America. It said it’s satisfied with holding just 40 percent of Braas. The offer is subject to clearance by financial authorities in Germany.

(An earlier version of this story was corrected to show Standard Industries originally had part of its offer accepted.)

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE