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Sika to paste a deal with Parex
Posted on Tuesday, 08 January 2019 12:42
Sika, in a move to expand its building materials business, is buying France-based mortar manufacturer Parex for CHF 2.50 billion (USD 2.54 million).
According to Zephyr, the M&A database published by Bureau van Dijk, the deal represents the buyer’s largest ever transaction, after having previously bought Sarna Kunstoff Holding for CHF 412.98 million in November 2005.
The purchase will be funded via a bridge loan facility that has been committed by UBS and Citi and is expected to generate between CHF 80.00 million and CHF 100.00 million in annual synergies.
Subject to a French works council consultation process and other regulatory approvals, the acquisition is due to close in the second or third quarter of 2019.
Through the deal, Sika will strengthen its presence within the construction chemicals and industrial adhesives industry, as well as increasing its company growth.
The buyer also gains access to the target’s 72 production plants and its research and development centres in France and China, adding to its existing 200 factories in over 101 countries.
Parex, which is currently owned by CVC Capital Partners’ CVC Fund V, claims to be the leading manufacturer of mortars, providing a range of decorative grouts, self-levelling compounds, cement and lime plasters and waterproofing membranes.
It has 4,400 employees across 22 countries, and posted sales of CHF 1.20 billion in 2018, with predicted earnings before interest, taxes, depreciation and amortisation of CHF 195.00 million.
Based on the transaction, Sika’s sales are projected to exceed CHF 8.00 billion, and will double its own mortar division to CHF 2.30 billion.
In 2018, the buyer achieved a company-high in sales of CHF 7.09 billion and expects to it to increase by a further 6.0 per cent to 8.0 per cent in 2019.
Paul Schuler, chief executive of Sika, said: “Using Parex technologies as a growth platform in all our 101 countries and cross-selling of our products to the well established distribution channels of Parex will generate great profitable growth.”
Zephyr shows there were 38 deals targeting adhesive manufacturers announced worldwide in 2018.
Interestingly, in the largest of these, Sika issued shares worth CHF 1.65 billion to unnamed acquirers.
Other companies targeted in this sector included BCPAR, Shanghai Kangda New Materials and NDFOs.
© Zephus Ltd