By Nicholas Earl
Sika has agreed to sell part of its admixture business to UK-based INEOS, the Swiss construction chemicals maker confirmed today, clearing the way for its $5.94bn (£4.87bn) acquisition of the former BASF Construction Chemicals business (MBCC).
Sika sold MBCC’s admixture assets in the United States, Canada, Europe and Britain, and the entire MBCC business in Australia and New Zealand to satisfy the concerns of competition authorities.
“The agreement with INEOS Enterprises marks a key milestone in Sika’s acquisition of MBCC Group,” said Sika chief executive Thomas Hasler in a statement.
“Sika has taken a tremendous leap forward on its path to joining forces with MBCC Group,” he added.
No cash amount was disclosed for the sale, although Sika said the businesses sold were less profitable than the rest of the MBCC business it is keeping.
The enterprise value of the sale was for a multiple slightly above 10 times earnings before interest, tax, depreciation and amortisation (EBITDA) which Sika said was under 100 million francs in 2022.
The business being sold generated sales of around 920m Swiss francs last year with sites in 36 countries and more than 1,600 employees.
The deal for MBCC – whose products include long-lasting flooring systems and admixtures to extend the life of concrete – was Sika’s biggest ever acquisition.
Sika expects to complete the acquisition of MBCC in the first half of 2023, and reconfirmed it still expected cost and sales synergies of 160-180m francs from the deal.
The company plans no further sales of assets as it seeks remaining approvals from authorities in North America, Britain, the European Union, Australia and New Zealand, a company spokesman said.
Bank Vonotobel analyst Bernd Pomrehn said Sika should now comply with all the regulatory requirements for the MBCC acquisition to go ahead.
“The overall closing of the deal took longer than expected and it is still not yet fully included in consensus estimates, but now it should help Sika to continue its growth story,” he said.
“With peak inflation behind us and rate hikes probably soon coming to an end, we are becoming more confident on growth stocks again.”
British billionaire Sir Jim Ratcliffe is the chairman and founder of INEOS – and still owns a two-thirds stake in the company.
Reuters.
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