April 15, 2015 / 8:51 AM / 5 years ago

UPDATE 4-Saint-Gobain to fight on after Sika AGM setback

(Adds analyst comment, share price reaction)

By Oliver Hirt and Katharina Bart

BAAR/ZURICH, Switzerland, April 15 (Reuters) - France’s Saint-Gobain said it was determined to complete a deal to buy Sika after the Swiss company won backing to foil the sale of a controlling stake at an investor meeting.

A lengthy court and regulatory battle for control of the Swiss chemicals firm looms after a seven-hour shareholder meeting on Tuesday where the divisions over the deal were played out in public.

The meeting was the latest chapter in an attempted 2.75 billion Swiss franc ($2.8 billion) takeover of Sika by Saint-Gobain. The deal is backed by Switzerland’s wealthy Burkard-Schenker family, the pivotal Sika shareholder, but opposed by the Swiss firm’s management and many board members.

Saint-Gobain, which did not speak at the meeting, said it was confident that Swiss courts would back the family’s position.

However, several analysts including Zuercher Kantonalbank and J. Safra Sarasin raised doubts about whether the French firm would stay the course.

“Saint-Gobain is going to have to ask whether this increasingly gruelling takeover battle is worthwhile,” ZKB said in a note on Wednesday.

“The situation remains convoluted, and the uncertain outcome speaks against the investment case for Sika.”

Sika shares, which have nearly recouped losses suffered following the announcement of the sale in December, fell on Wednesday. At 0830 GMT, the Sika stock traded down 3.4 percent, while Saint-Gobain shares rose 0.25 percent

JULY MEETING

On Tuesday, board members including chairman Paul Haelg who are marshalling opposition to Saint-Gobain were reelected easily, and the family’s candidate was blocked.

Shareholders also agreed on another investor meeting, to be held on July 24, backing a request by the family.

“Today is about nothing less than Sika’s future and that of its 17,000 employees,” Haelg told 675 shareholders at the company’s regular investor meeting, which was transferred to a larger venue due to demand.

The controlling Burkard-Schenker family owns just over 16 percent of Sika’s shares, but holds a majority of the company’s voting rights because of a dual-stock system.

Haelg said the company would curb the Burkard-Schenker’s voting stake to five percent on several key issues, which severed the family’s ability to vote down rebellious board members in order to pave the way for the deal.

Haelg said board members had hammered out an alternative aimed at giving the family a premium, but was also in the company’s best interest. Haelg did not explain the alternative.

“What the board is doing here is simply expropriation, robbing us of our votes and our right of control over Sika,” said Urs Burkard, a representative of the family who sits on the company’s board.

While the family owns a controlling stake and Saint-Gobain is not legally required to make an offer to Sika’s minority shareholders, prominent investors including the Bill and Melinda Gates Foundation have moved to force the French building materials firm to do so.

Reporting By Oliver Hirt in Baar; additional reporting by Katharina Bart and Paul Arnold in Zurich; writing by Katharina Bart.; Editing by Keith Weir

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