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Ruling Favors Saint-Gobain in Takeover Bid

Swiss regulator rules company not required to buy all shares, but questions remain.
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European building materials supplier Saint-Gobain appears to have moved closer to its proposed – and highly contentious – acquisition of Swiss chemicals company and competitor Sika AG.

The Swiss Takeover Board last week ruled the Burkard-Schenker family, which owns 16.1 percent of Sika's capital and 52.4 percent of its voting rights through Schenker-Winkler Holding AG, can sell its controlling stake in Sika and that Saint-Gobain isn't required to purchase Sika's remaining shares.

The regulator cited an opt-out clause in Sika's bylaws, meaning Saint-Gobain can acquire control of Sika for CHF 2.8 billion (US$2.8 billion), much less than if it had to buy all the outstanding shares. Saint-Gobain last year announced plans to purchase Schenker-Winkler Holding but not the remaining shares in Sika; when Sika leaders resisted the attempt, Saint-Gobain took the matter to court.

"The decision of the TOB (Swiss Takeover Board) comforts us," a Saint-Gobain spokeswoman told Reuters. "The legal situation was well known to and recognized by all … A part of the management or the board of a company cannot decide when, and to whom, shareholders can sell their shares."

The board didn't rule on whether the proposed takeover was abusive, stating: "The question of whether and under what circumstances an invocation of the opting out clause could be improper is not subject to these proceedings."

Sika responded by saying: "The Takeover Board has explicitly not decided the question whether in view of the proposed transaction the use of the Opting-Out by Saint-Gobain is abusive. According to the Takeover Board this question will only have to be decided if indeed Saint-Gobain were to acquire more than 33 1/3 percent of the votes in Sika and then invoked the Opting-Out."

Saint-Gobain last month reported sales declined for 2014 and fourth quarter. The company said its proposed acquisition of Sika is "fully aligned" with 2015 strategic priorities that include expanding in emerging countries and strengthening its business portfolio.

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