Saint-Gobain to Grant Wendel Board Seats, People Say (Update3)

March 18 (Bloomberg) -- Cie. de Saint-Gobain SA, Europe's largest provider of construction materials, plans to grant three board seats to buyout firm Wendel, its biggest shareholder, said four people directly involved in the talks.

Wendel, Europe's second-biggest publicly traded private equity firm, agreed to limit its stake and voting rights in return for the seats, said the people, who declined to be identified because the talks are private. Paris-based Saint- Gobain may announce the deal on March 20 after a board meeting, the people said.

Wendel has built an 18 percent stake in Saint-Gobain over seven months and said it wants to take part in strategic decisions. The two companies failed to reach agreement on the seats last month, when the supplier of plumbing, insulation and mortar asked Wendel to give up the double voting rights it would gain after holding the stock for two years.

``Saint-Gobain and Wendel burying the hatchet could help Saint-Gobain shares rebound a little,'' said UBS analyst Eric Schneider, who has a ``buy'' rating on the stock. ``Longer term, an accord with Wendel may also mean more cost-cutting and divestments.''

Saint-Gobain rose 2.43 euros, or 5.3 percent, to 47.93 euros in Paris, the sharpest increase since Feb. 1. Wendel advanced as much as 3.4 euros, or 4.8 percent, and closed at 73.29 euros.

Wendel spokeswoman Christine Dutreil declined to comment, as did Saint-Gobain spokeswoman Sophie Chevallon.

U.S. Slowdown

Shares of building materials suppliers such as Saint-Gobain and Dublin-based rival CRH Plc have fallen on investor concern that a U.S. construction slowdown may spread to the European market. Saint-Gobain lost 31 percent since Wendel started building its stake, cutting the company's market value to 17.9 billion euros. CRH fell 14 percent.

Wendel has declined 39 percent in the same period, giving the private-equity firm a market value of 3.69 billion euros.

In return for the board seats, Wendel also agreed to limit its stake to 21.5 percent and cap its voting rights temporarily, the people said. Saint-Gobain will also form a strategic committee, which will include Wendel representatives.

Saint-Gobain Chief Executive Officer Pierre-Andre de Chalendar, who took over in June, said July 26 he plans to focus on higher-margin materials such as insulation and dispose of the company's glass packaging business. The company bought the Maxit Mortars unit of Germany's HeidelbergCement AG in August for 2.13 billion euros.

Photo: A worker checks a plate of glass on the production line at the Saint-Gobain Chantereine glass factory in Thourotte, France, on Wednesday, Oct. 17, 2007. Photographer: Fabrice Dimier/Bloomberg News

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600450 Saint-Gobain to Grant Wendel Board Seats, People Say (Update3)
Date: 20 March 2008
Source: Bloomberg

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