John Revill

ZURICH, (Reuters) – Sika, a Swiss company, has announced that it will buy MBCC construction chemicals manufacturer from Lone Star for 5.5 Billion Swiss Francs ($6.03B). The deal comes as the Swiss company continues to consolidate its strategy in the $70bn sector.

Sika announced that it had purchased MBCC Group from Lone Star Funds’ affiliate.

Sika stated that the deal is a multiplier of 11.5 times MBCC’s 2022 earnings without interest, tax and amortization. It expects to achieve synergies of 160–180 million francs, bringing the multiple down to 8.5.

It would finance it with a bridge credit.

Sika stated that it is committed to keeping a high investment-grade credit rating. It also plans to establish a long term funding structure consisting of cash, loans from banks, and capital market instruments.

MBCC, based near Mannheim in Germany, anticipates that 2021 will see a record 2.9 million Swiss francs of sales from chemical admixtures as well as construction systems.

Thomas Hasler, Chief Executive of Sika, stated in a statement that “Together they will strengthen our complementary ranges of products and services throughout the entire construction cycle.”

Sika made a major step in the purchase of MBCC, having already purchased seven smaller companies in China, Mexico and Brazil this year.

Sika’s products can be used to strengthen and waterproof cement. Sika is looking to expand its market share in the construction chemicals industry from 10% to 12% by 2025.

Sika predicts that the market will grow to 80 billion Francs annually by 2025, from 70 billion at present. Government stimulus programs and trend towards sustainable building are fuelling an infrastructure boom.

In January 2019, Parex, a French mortar producer, was acquired by the Swiss for 2.5 billion Swiss francs.

Sika said that it will return to an active acquisitions strategy in 2021, after the coronavirus restrictions had limited its ability analyse takeover targets for 2020.

($1 = 0.9127 Swiss francs)