German tile manufacturer Braas Monier have announced in a press release that they are willing to sell the company to U.S. firm Standard Industries, but the valuation by the Americans of around two billion dollars is too low.
Braas received terms last week which included the offer to purchase each of their shares for 30 euros in cash, representing a 20 percent premium over the stocks finishing price before official talks began. Standard already owns prominent roofing outfits Siplast and SGI.
A Braas spokesperson said that Standard had “neglected to add any control premium to the offer” and that they have “most definitely undervalued the company.”
David Millstone, chief executive at Standard Industries was quick to reassure employees that any potential merger would not involve job cuts or other cost saving restructuring.
“Our aim is to make Standard a major player in the global roofing sector. In order to do that we must continue consolidating so we can compete with the firms at the top of the ladder. We are getting bigger and employing a larger workforce, we are not downsizing companies we acquire,” Millstone said.
Analysts say the newly created entity would employ nearly 20,000 people and have over five billion dollars worth of sales per year. Standard desperately wants to add a pitched residential roofing specialist to their group as their current operations focus mainly on flat roofs. The company have been looking to get a foothold in Europe, where only 15 percent of its earnings come from. The remaining 80 percent comes from its domestic U.S. sales.
“It’s hard to say at the moment which way this one is going to go,” said James Coleman, Managing Director and co-head of Portfolio Trading at Softbank CIBC International in a note to clients. “Many of the bigger shareholder groups like 40N Latitude are ready to let their share of the company go, and it’s a substantial share at around 35 percent. But there are a lot who will hold out with an offer like the one Standard have tendered. It’s a little on the short side most unbiased observers would agree.”
A representative of Lucerne Capital, which owns 7 percent of Braas said in a phone interview, “having gone over the Standard offer with the board we can confidently say that we have no intention of letting our shares go for that price. The offer doesn’t reflect the potential benefits.”
