Sika and Saint-Gobain settle bitter dispute

Paul Hälg, chairman of Sika's board of directors, speaks during the company's AGM in April Keystone

Swiss chemicals manufacturer Sika and French building materials company Saint-Gobain have reached an agreement to end an almost four-year legal dispute, which will result in Saint-Gobain acquiring a large stake in Sika. 

This content was published on May 11, 2018 - 18:59
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The complex deal will see Saint-Gobain acquiring all outstanding shares of Schenker-Winkler Holding (SWH) from the Burkard family, heirs to the founder of Sika, for a purchase price of CHF3.22 billion ($3.21 billion), Sika said in a statement on Friday.  Following the settlement, Sika's share price increased by 8.3% by the end of the day.  

The dispute

The dispute over control of Sika has been raging since 2014 when Saint-Gobain offered CHF2.75 billion to buy the Burkhard’s controlling stake – comprising just 16% of the share capital but 53% of voting rights. 

Sika’s board objected, and the warring sides were locked in a stalemate in what became an expensive battle in the courts and a rare example of Swiss corporate enmity spilling into the public eye. 

The Burkards favoured the French offer, while Sika’s board and investors, including the Bill & Melinda Gates Foundation, fought it, in part on grounds it violated corporate governance principles by giving Saint-Gobain control without having to offer the same terms to all shareholders. 

To get around this board rebellion, all the Burkards had to do was replace them with more pliable directors at Sika’s AGM in 2015. But Sika slapped a 5% restriction on the Burkard vote when it came to the election of board members. This continued at the 2016, 2017 and 2018 AGMs. 

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This reflects an increase of more than CHF500 million from the purchase price agreed in December 2014 between Saint-Gobain and the Burkard Family, which takes into account the increase in Sika’s value since 2014, Sika said. 

Saint-Gobain and SWH have also agreed to sell a 6.97% stake in Sika back to Sika for CHF2.1 billion, with Saint-Gobain retaining a 10.75% stake in the Swiss company via the holding company for a minimum of two years. 

Sika plans to hold an extraordinary shareholders meeting on June 11 to establish a new unitary share class. 

It added that all pending litigation would be terminated. 

‘Success story’ 

All sides said on Friday they were happy with the deal. 

“The board and group management of Sika welcome this positive outcome. This solution paves the way for a new chapter of our success story,” said Paul Hälg, chairman of the Sika board of directors, and CEO Paul Schuler in a statement. 

Urs F. Burkard, spokesman for the Burkard family, said: “We are pleased that Saint-Gobain, as a significant Sika customer, is now the company’s largest shareholder. The solution agreed between the parties involved takes into account the interests of all shareholders and forms the basis for continuing Sika’s success story. The primary concern of the family has always been to ensure Sika’s success and long-term prosperity.” 

“This is a very positive settlement for Saint-Gobain, both from a financial and a strategic perspective,” said Pierre André de Chalendar, chairman and CEO of Saint-Gobain. “We materialise a substantial positive net result in excess of €600 million (CHF716 million) for our shareholders. We also retain a minority stake in a great company and will enhance the relationship between the two groups.”


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