Saint-Gobain to buy CSR for $4.3 billion

One of the oldest companies listed on the Australian Stock Exchange (ASX) is set to change hands after French multinational Compagnie de Saint-Gobain reached a deal to buy building products group CSR (ASX: CSR) for $4.32 billion.

Established in Sydney in 1855 as the Colonial Sugar Refining Company, CSR diversified into building materials during WWII and listed on the ASX in 1962.

Around half a decade later in 2010, the sugar and ethanol business – by then known as Sucrogen – was sold to Singapore’s Wilmar International for $1.75 billion, making the company a pure-play building products business.

For its building products division with numerous brands to its name including Gyprock, Bradford, Cimintel and Hebel, CSR recently reported record half-year results for the six months to 30 September with EBIT up 18 per cent to $165 million, although earnings from its aluminium business were flipped into the red at a $24 million loss due to “significantly higher energy and coal pass-through costs”.

According to figures from Statista, Saint-Gobain was the world’s  largest global construction material manufacturer in 2022, with sales that were much higher than the second-largest player China National Building.

The French giant will be announcing its full-year 2023 results later this week, but its EBITDA in the first half of 2023 stood at €3.68 billion ($6.1 billion).

“I am delighted to announce the acquisition of CSR that represents a decisive step for Saint-Gobain to establish a leading presence in the high-growth Australian construction market,” says Saint-Gobain’s chief executive officer Benoit Bazin.

“It is fully aligned with our ‘Grow & Impact’ strategy and our vision for worldwide leadership in light and sustainable construction. We have admired CSR for many years and have successfully worked together as partners.

“I am very impressed with CSR’s leadership, the quality of the strategy, and the team’s excellent execution of that strategy.”

The two parties have entered a scheme implementation deed to effectuate the merger, subject to conditions such as a favourable report from an independent expert, regulatory approvals from the Foreign Investment Review Board (FIRB), approval from shareholders, and no adverse changes to CSR.

The proposed price of $9 per share represents an 8 per cent premium to the last trading price for CSR, and a 33 per cent premium to the closing price on 20 February when media speculation arose around a possible transaction.

“The board has very carefully considered the terms of the proposal and is unanimous in its recommendation to shareholders. The final proposal follows an initial offer in early January this year and a period of negotiation,” says CSR chairman John Gillam.

“The board believes the scheme provides attractive value and certainty for CSR shareholders and is a validation of the successful execution of CSR’s strategy.”

CSR managing director and CEO Julie Coates believes the French buyer has strong strategic and cultural alignment with CSR and will “support innovation in the Australian and New Zealand building products industry”.

“The transaction also offers opportunities for our other stakeholders, including the CSR team and customers,” she says.

“Our focus remains on delivering outstanding building solutions for our customers and the building and construction markets in which we operate.”