LONDON: Saint-Gobain and Continental Building Products have entered into a definitive agreement pursuant to which Saint-Gobain will acquire all of the outstanding shares of Continental Building Products for $37.00 per share, in cash, in a transaction valued at approximately $1.4 billion (approximately €1.3 billion).

The business combination has been unanimously approved by the Board of Directors of Saint-Gobain and by Continental Building Products’ Board of Directors.

Continental Building Products, a highly respected plasterboard player in North America, employs 645 people and is expected to generate 2019 revenues of approximately $510 million and adjusted EBITDA of approximately $130 million per broker consensus.

The business has strong geographic complementarity with Saint-Gobain’s North American operations, good positioning in growth regions in the East and South-East of the United States and strong profitability.

The agreed upon price represents a premium of 34.4% to the volume weighted average price for the 60 trading days ending November 11, 2019, a multiple (before synergies) of approximately 11.0x Continental Building Product’s 2019E adjusted EBITDA of $130 million per broker consensus estimates and a multiple of 7.9x EBITDA post run-rate synergies. Saint-Gobain will largely finance the acquisition using the proceeds from divestments made by the Group. Saint-Gobain expects the transaction to be value creative by the third year following transaction close, in line with the Group’s acquisition criteria.

Edward Bosowski, Chairman of Continental Building Products and Jay Bachmann, Chief Executive Officer, commented: “This is an exciting day for Continental Building Products, our shareholders, customers and employees and represents the culmination of the hard work of our highly talented workforce. Saint-Gobain is the ideal strategic partner with the resources to support our development, commitment to operational excellence and global platform that will enable us to continue to provide outstanding customer service. We believe this is a terrific outcome for our shareholders and thank the teams at Continental Building Products for the fantastic work they have done over many years.”

Pierre-André de Chalendar, Chairman and Chief Executive Officer of Saint-Gobain, and Benoit Bazin, Chief Operating Officer, commented: “The acquisition of Continental Building Products is a unique opportunity allowing Saint-Gobain to move to the forefront of plasterboard and construction solutions in North America. With the very strong industrial platform and expert teams that Continental Building Products brings, Saint-Gobain will be able to accelerate the deployment of its innovative product offering in order to better serve customers. We are very impressed by the quality of work accomplished by the Continental Building Products’ teams over many years and are very happy to welcome them to Saint-Gobain. We share the same industrial and commercial cultures as the Continental Building Products’ teams and are confident that together we can leverage our expertise and know-how to drive sustainable and profitable growth, to the benefit of our customers and the end consumer. This transaction will enable Saint-Gobain to enhance its growth and profitability profile, in line with the ‘Transform & Grow’ program, and to create value for our shareholders.”

This transaction is part of Saint-Gobain’s portfolio optimization strategy, one of the two pillars of the transformation program “Transform & Grow”. Divestments completed or signed by the Group to date represent sales of around €3.3 billion with cash proceeds of over €1 billion, for an EBITDA multiple of around 10x and an operating income multiple of around 15x. The full-year operating margin impact is more than 40 basis points, ahead of the target of the “Transform & Grow” program of a gain of 40 basis points in the operating margin. Saint-Gobain is continuing its divestment program even though the initial target of over €3 billion in sales divested by the end of the year has already been met.

With regard to acquisitions, the Group has closed 12 transactions since the beginning of the year including Pritex (Mobility, acoustic solutions), Plaka Mexico (plasterboard), Celima (Mortars in Peru), as well as transactions to optimize our positioning in Distribution in Nordic countries.

Closing of the transaction is subject to Continental Building Products shareholders’ approval, U.S. antitrust approval and fulfillment of other customary closing conditions with expected closing in the second half of 2020.

Lazard and Morgan Stanley are acting as financial advisors, and Cleary Gottlieb Steen & Hamilton is acting as legal counsel to Saint-Gobain in connection with the transaction.