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13 November 2019 By Christopher Thompson Follow @CGAThompson

The $22 bln construction company is buying Virginia-based Continental for $1.4 bln. CEO Pierre-André de Chalendar is paying a full price to ease his reliance on Europe. Even with hefty cost savings, the French group’s shareholders face a long wait to make an acceptable return.

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French construction material producer Saint Gobain said on Nov. 12 that it has agreed to buy U.S. company Continental Building Products, valuing the group at $1.4 billion including debt.

Continental, which makes gypsum wallboards, will be merged into a newly formed unit of Saint Gobain. The deal has been approved by both companies’ boards.

In a statement Saint Gobain said it will pay $37 per share in cash, representing a 34.4% premium to Continental’s volume weighted average price for the 60 trading days ending Nov. 11.

The company added that the acquisition would generate $50 million of cost synergies by the end of the third year following the closing of the transaction.

Saint Gobain shares were down 3% at 37.06 euros by 1130 GMT on Nov. 13.

Context News

French construction material producer Saint Gobain said on Nov. 12 that it has agreed to buy U.S. company Continental Building Products, valuing the group at $1.4 billion including debt.

Continental, which makes gypsum wallboards, will be merged into a newly formed unit of Saint Gobain. The deal has been approved by both companies’ boards.

In a statement Saint Gobain said it will pay $37 per share in cash, representing a 34.4% premium to Continental’s volume weighted average price for the 60 trading days ending Nov. 11.

The company added that the acquisition would generate $50 million of cost synergies by the end of the third year following the closing of the transaction.

Saint Gobain shares were down 3% at 37.06 euros by 1130 GMT on Nov. 13.

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