Braas Monier Building Group SA, the German maker of concrete and clay roofing trying to fend off a takeover, said an unsolicited bid from Standard Industries Inc. of the U.S. ignores potential cost savings and comparable deals.
Standard Industries could reap 30 million euros to 40 million euros ($45 million) in synergies by combining its existing rooftiles maker Icopal A/S with Braas Monier, according to estimates cited in a letter to shareholders seen by Bloomberg.
Those savings aren’t reflected in the takeover offer of 25 euros a share that was made public on Sept. 14, the German company said. That compares with a closing price of 21.74 euros on Sept. 13 and on Thursday of 25.81 euros. At Braas Monier’s IPO in June 2014, the shares were sold at 24 euros apiece.
The 25 euros-a-share offer values Braas Monier at 8.7 times earnings before interest, taxes, depreciation and amortization, according to the letter, titled “Four clear reasons to reject the unsolicited offer from Standard Industries.” That’s below the 10.5 times that a Standard Industries unit paid in April to acquire Danish rooftiles maker Icopal.
The bid also contains no “customary premium” in exchange for control and doesn’t reflect improvements in the business since 2013, Braas Monier said in the letter. Since then, the company has had a 63 percent increase in operating income, and has good future prospects after seven acquisitions and debt reduction.
Despite the rejection, Braas Monier’s board left open the door for accepting a higher offer.
“The board is focused on maximizing the value and position of all stakeholders over time,” the letter shows. “To the extent that the board receives a takeover or merger proposal which offers fair and appropriate value, such a proposal would receive full consideration.”
Standard Industries, which is run by co-heads David Millstone and David Winter, acquired about 29.1 percent of Braas Monier via an investment vehicle in June, before unexpectedly unveiling plans to pursue a takeover in mid-September, according to the letter.
The U.S. firm also received a commitment from owners, including Apollo Global Management LLC, TowerBrook Capital Partners and York Capital Management, to tender their remaining 10.8 percent. Those investors took over the company in 2009 in a debt restructuring.
Co-CEO Winter laid out his vision to combine Braas with Standard Industries’ existing activities at a press conference in Frankfurt on Sept. 15. He said the combination would create a market leader with more than 15,000 employees and a footprint spanning the U.S. and Europe.
The product lines and geographies are “largely complementary,” Winter said last week, adding that the deal “is about growth, not cutting costs or jobs.”