ZURICH (Businesshala) – Sika has agreed to buy construction chemicals maker MBCC from Lone Star in a 5.5 billion Swiss franc ($6.03 billion) deal, the Swiss company said on Thursday, as it seeks its consolidator in the fragmented $70 billion sector. Carries out the strategy.
Sika said it was buying MBCC Group, formerly BASF Construction Chemicals, from an affiliate of Lone Star Funds, a private equity firm.
Sika said the deal represents a multiple of 11.5 times MBCC’s expected 2022 earnings before interest, taxes, depreciation and amortization. It is expected to achieve synergies of 160–180 million francs, reducing the multiplier to 8.5.
It will finance the deal, which, along with the bridge loan, is expected to “strongly accrue” to earnings per share since the first full year.
Sika said it is committed to maintaining a strong investment grade credit rating and intends to establish a long-term funding framework that includes cash on hand, bank credit and capital market instruments.
MBCC, based in Mannheim, Germany, expects 2021 sales of 2.9 billion Swiss francs from the sale of manufacturing systems and chemical blends.
“Together we will strengthen our complementary range of products and services throughout the manufacturing lifecycle,” Sika Chief Executive Thomas Hasler said in a statement.
MBCC’s move represents a step change for Sika, which this year has bought seven smaller companies in China, Mexico, the United States, Japan, Brazil and Russia.
Sika, whose products are used for waterproofing and reinforcing cement, is looking to increase its market share in the construction chemicals market from about 10% to 12% by 2025.
Sika expects the market to grow from 70 billion francs to about 80 billion francs by 2025, with government stimulus programs and a trend toward more sustainable building fueling a global infrastructure boom.
Its previous biggest deal was the 2.5 billion Swiss franc acquisition of French mortar maker Parex in January 2019.
Sika had said it would return to a more proactive takeover policy in 2021 as coronavirus restrictions limited its ability to analyze acquisition targets in 2020.
($1 = 0.9127 Swiss Franc)