French building materials manufacturer Cie. de Saint-Gobain has agreed to purchase U.S. specialty chemicals maker GCP Applied Technologies Inc., in a bet of growth from U.S. President Joe Biden’s infrastructure plan.
Saint-Gobain announced Monday that investors will be paid $32 per GCP Applied share in a cash-financed deal. This is 18% more than Friday’s closing prices. Bloomberg reported last week, that Saint-Gobain was one of the suitors for the purchase.
Chief Executive Officer Benoit Bazin stated that “we are very confident in American market.” He spoke to reporters on a conference call. Bazin noted that the ambitious infrastructure spending plans of the U.S. government will drive demand for cement.
Saint-Gobain has been aggressively pursuing the North American market in recent times. In 2019, he agreed to purchase Continental Building Products Inc., a U.S. drywall manufacturer, for $1.4 billion. He also laid plans for new plants in the region. Bazin stated that he has been following GCP for many years.
Saint-Gobain’s shares rose by as much as 1.6% in Paris. This year, the shares have increased 56%.
This agreement is another sign that dealmaking is heating up in the industry as construction recovers from last year’s worst pandemic. European rival Sika AG agreed in November to acquire MBCC Group, the former construction-chemicals unit of BASF SE, for 5.5 billion Swiss francs ($6 billion). This deal was made possible by Sika’s 2019 acquisition of Parex Group, a mortars business, for 2.5 billion Swiss Francs.
GCP completed a strategic review in 2019, but was unsuccessful in finding a buyer. Saint-Gobain said Monday that it will continue GCP’s turnaround plan. It was strengthened by new management following years of turmoil. This will allow for $85 million in synergies, including roofing and building façades. The company expects to close the deal by the end of next year.
Saint-Gobain would be adding GCP Applied to its recently purchased Chryso, a French business in construction chemicals, for 1 Billion Euros ($1.1 billion). Bazin stated that the deal would strengthen the group’s position as a leader in construction chemicals. This technology, Bazin claimed, can significantly lower carbon emissions in cement products by the use of additives.
According to the statement, GCP generates approximately $1 billion annually and has 50 manufacturing locations in 38 countries. It employs around 1,800 people.