The French conglomerate Bouygues is consolidating its position in Switzerland after its Swiss subsidiary Losinger agreed to take over smaller domestic rival Marazzi.This content was published on May 26, 2006 - 08:16
The deal will lead to a further concentration in Switzerland's building industry in the wake of a merger of the country's two leading construction companies earlier this year.
Experts believe the deals are the result of a strategy which targets business abroad, but they say a wave of takeovers and mergers is unlikely.
Switzerland's construction industry is split up into thousands of individual firms. But the top ten companies pay about a fifth of all salaries – underlining a move towards company mergers.
In January, Geneva-based Zschokke and Batigroup from Basel set up a joint company, Implenia, to become the country's market leader.
Local market leaders
Earlier this week, the construction arm of the French conglomerate, Bouygues, announced that its Swiss subsidiary Losinger – the country's number three - would take over Bern-based Marazzi Holding.
The deal, which is subject to approval by the authorities, will boost Bouygues' position as the world number two, particularly in eastern Switzerland.
"The acquisition is part of our growth strategy in Europe by relying on local market leaders," Bouygues said in a statement.
Marazzi, with sales of SFr461 million ($379 million) in 2005, has worked on the new soccer stadiums in Basel and Bern and has similar projects outside Switzerland, notably in neighbouring Austria as well as in Serbia.
The Association of Swiss Master Builders believes that a wave of mergers or takeovers is unlikely, as there is no sign of overcapacity in the sector and because of the increasing tendency to work with subcontractors.
Serge Oesch, deputy director of the Master Builders Association, says the creation of Implenia was driven by the strategy to do business abroad. In the case of Marazzi and Losinger, the French conglomerate Bouygues offers better access to markets in eastern Europe, according to Oesch.
Martin Hüsler, an analyst with Zurich Cantonal Bank, says mergers among building companies are difficult because the firms are often in the hands of a single family and their bosses are often reluctant to give up power.
Hüsler says there are two main growth strategies for building firms - either finding a niche in the market or increasing the company's efficiency.
"Some eye the markets abroad, because the Swiss sector is too limited," he says.
Hüsler points out that companies need to have a certain size to be able to take risks and seek contracts outside the country.
The domestic market has opened up to foreign competition but it is still rare for a major contract to go to a non-Swiss company, despite new regulations.
Oesch says it will remain difficult for foreign firms to break into the market.
"The situation is unlikely to change significantly in the future, besides contracts for the construction of tunnels [for the new transalpine rail link through the Gotthard] or other major projects," Oesch told swissinfo.
He believes that Bouygues will be the only major foreign player in the Swiss building sector for some time to come.
swissinfo, Pierre-François Besson
Bouygues took over the Swiss company Losinger in 1990, which in turn has now agreed to take over Marazzi Holding.
Losinger – Switzerland's number three - has 920 employees; Marazzi has 400 employees.
Losinger said it planned on taking on about 150 new engineers, architects and managers.
Combined sales are estimated to reach more than SFr1 billion.
The Swiss market leader is Implenia, a merger of Zschokke and Batigroup, implemented in January.
The Swiss building sector reported sales of SFr45 billion ($37 billion) last year and employed more than 300,000 people.
A major crisis of the Swiss construction industry in the 1990s led to a reduction of 60% of all jobs in the sector, but it has recovered significantly since.
The French conglomerate, Bouygues, is the world number two construction company. It employs about 40,000 people in 60 countries and reported sales of €6 billion.
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