BPB caves in to Saint-Gobain at 775p

Biggest contested takeover battle in years ends in French victory. BPB secures higher offer
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The Independent Online

Directors of BPB and Saint-Gobain were close to agreeing a £4bn takeover of the British plasterboard maker last night after one of the most bitterly contested bid battles of recent times. A recommended offer of 775p a share may be announced as soon as this morning.

Saint-Gobain, the French building materials supplier, is understood to have dug deeper into its pockets to lift its 720p-a-share hostile approach - deemed way too mean by BPB and its shareholders. The new offer represents a premium of 50 per cent to BPB's share price of 515p before news of Saint-Gobain's interest leaked in July, and is much higher than the 760p floated by Saint-Gobain's advisers earlier this week. The stock closed at 741.5p last night.

Saint-Gobain has been canvassing BPB's major shareholders over the past few days on a price at which they would sell. Top shareholders include M&G, Standard Life, Barclays Global Investors, Fidelity and Sprucegrove of Canada. Most backed BPB's board, which they said was doing a grand job of running the business and mounting a robust defence against Saint-Gobain.

Last week BPB unveiled underlying pre-tax profits of £185m for the six months to the end of September - up 28.5 per cent - and reiterated it is confident of posting record profits for the full-year of at least £350m. That was towards the top end of City expectations, after hungry demand across Europe and in emerging markets such as Brazil, India, Chile and South Africa.

Sir Ian Gibson, BPB's chairman, has pledged £70m in annual cost savings by 2010, £20m of which have been delivered. Some £600m will be returned to shareholders as soon as possible.

In contrast, Saint-Gobain, whose chairman is Jean-Louis Beffa, trimmed its forecasts for 2005 operating profits last month on the back of surging energy and transport costs. Analysts have said the company covets BPB as a means of reviving stalled growth.

Short-term investors, such as hedge funds, are thought to control about one-quarter of BPB's shares. They snapped up stock at about 730p three months ago, have little interest in the long-term prospects for the group, and are poised to make a killing.

Saint-Gobain, BPB's biggest customer, had until the end of this week to raise its offer. BPB insisted the earlier cash offer failed to take into account its record earnings, strong balance sheet, strong dividend stream or any premium rightly expected for a change of ownership. Last week, Sir Ian put the company's value at 832p based on the most recent takeover in the sector - that of Aggregate Industries by Holcim in 2004.

The battle for BPB came amid a recent swathe of takeover attempts on UK companies by overseas businesses. Among those FTSE 100 companies on the receiving end of overseas approaches are Allied Domecq, Exel, O2, ScottishPower and P&O.

Executives from Japan's Nippon Sheet Glass are in Britain looking to secure the glass maker Pilkington. That too may be resolved sooner rather than later.

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