Saint-Gobain acquires FOSROC for $1,025 mn; to strengthen presence in India, Middle East

The strategic rationale for this acquisition is to bolster Saint-Gobain's presence in high-growth emerging markets, especially India and the Middle East.

Saint-Gobain announced a definitive agreement to acquire FORSOC, a global construction chemicals, for $1,025 million (approximately €960 million) in cash. The acquisition with FOSROC is expected to create value by the third year and will expand presence of the construction and industrial material company in India, Middle-East.

Benoit Bazin, Chairman and CEO of Saint-Gobain, stated, "It is a unique opportunity to reinforce our worldwide presence in construction chemicals and strengthen our foothold in high-growth emerging markets, particularly in India and the Middle East."

This strategic move follows the acquisitions of Chryso in 2021, GCP in 2022, and 33 additional acquisitions since 2021, further establishing Saint-Gobain's worldwide presence in construction chemicals. The acquisition will bring the combined sales in this sector to €6.2 billion across 73 countries.

“…will have combined sales of €6.2 billion across 73 countries following the acquisition (pro forma),” according to the press release on June 27.

Saint-Gobain is purchasing for a price that is 11.3 times FOSROC's projected EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) for 2024, which is estimated at $91 million. This acquisition is anticipated to be value-creative for shareholders and customers, with expected synergies of $54 million by the third-year post-acquisition, comprising $39 million in cost synergies and $15 million in growth synergies.

“The purchase price represents an acquisition multiple (before synergies) of approximately 11.3x FOSROC’s 2024E EBITDA of $91 million, and a multiple of approximately 7.1x when including run-rate synergies of approximately $54 million in year 3,” noted the release.

The acquisition will be paid entirely in cash, Saint-Gobain will maintain a healthy balance sheet maintaining net debt to EBITDA ratio (a measure of financial leverage) will remain within the target range of 1.5x to 2.0x. The deal is expected to be finalized in the first half of 2025, subject to “customary conditions”.

FOSROC known for its strong presence in India, the Middle East, and Asia-Pacific, is expected to generate $487 million in sales and achieve an EBITDA margin of 18.7 percent in 2024. With 20 manufacturing plants and around 3,000 employees, FOSROC offers a wide range of technical solutions for the construction industry, including admixtures, additives for concrete and cement, adhesives, sealants, waterproofing solutions, concrete repair solutions, and flooring.

The strategic rationale for this acquisition is to bolster Saint-Gobain's presence in high-growth emerging markets, especially India and the Middle East.

This acquisition will be led by Thierry Bernard, Chief Executive Officer of Construction Chemicals, who also managed integration of Chryso business, GCP within Saint-Gobain since 2022.

“A value-creative acquisition for Saint-Gobain’s shareholders and customers, with strong synergy potential. $54 million expected synergies in year 3 following transaction close, of which $39 million are cost synergies which are expected to be captured through economies of scale in purchasing (including on raw materials and vertical integration of polymers production), footprint optimization, SG&A savings and manufacturing and logistics cost optimization. Saint-Gobain expects to benefit from at least $15 million of growth synergies thanks to cross-selling opportunities, combining the Group’s innovation capabilities with Fosroc’s strength in infrastructure, and to its customer relationships,” stated the release.

FOSROC's capabilities, brand recognition, and technical expertise are highly complementary to Saint-Gobain's existing operations.

Morgan Stanley served as financial advisor, and Freshfields provided legal counsel to Saint-Gobain for the transaction.