BPB rejects Saint-Gobain offer, saying it is too low

Saint Gobain said it stood by its quoted price.

BPB, the world's largest plasterboard maker, said it is expected to have an increased profit for this year -- a rise of at least 24 per cent to 350 million pounds. This would get a value for its shares at 715 pence on an average rating applied to peer companies in the building materials supply. In this background, said BPB chief executive Richard Cousins, the Saint Gobain offer fundamentally undervalued the business. As if to substantiate his views, BPB shares closed on Tuesday at 736.5 pence, 16.5 pence above the offer price.

BPB's chairman Sir Iran Gibson, in a letter, told shareholders to reject the bid, saying the offer fails to recognise the unique position of the company, its outstanding track record and exceptional growth prospects.

BPB runs 90 factories worldwide and sells products such as insulation and ceiling tiles in more than 50 countries. It has a substantial European market -- 70 per cent of its business comes from here -- and it is growing at 5-6 per cent a year. The company also has a large presence in North America and the emerging markets of China and India.

Saint-Gobain, which has 40 businesses and 18,500 staff in the U.K. and Ireland, rejected the peer group comparison contending the valuation included a number of U.S. aggregate companies whose shares traditionally traded on much higher multiples than their European counterparts.

The two companies have a joint venture and the boards were fairly close before the bid was announced on 1 August.