St-Gobain sees more acquisitions

"We can perfectly continue our strategy as we have no financing problems, but I think we should sell some activities to continue and improve the structure of Saint-Gobain's portfolio," Chief Executive Jean-Louis Beffa told a news conference.

Saint-Gobain also intends to take advantage of low interest rates and a flattening out of asbestos claims against the company to make more acquisitions, of small and medium size, in particular in its building distribution sector, Beffa said.

He gave no further details on what these acquisitions could be.

"We want to sell assets in a profitable manner. We'll make these divestments only if they are rightly valued," he added, declining to say which businesses Saint-Gobain intended to sell but saying asset sales would take place in the next 18 months.

"I think BPB (deal) has shown that Saint-Gobain knows how to make a acquisition, Our divestments must show that the company also knows how to sell well."

Beffa was talking to journalists and analysts at a meeting detailing the conditions of its 3.9 billion pound offer for BPB after Saint-Gobain agreed on Thursday to take control of the fast-growing plasterboard maker.

The deal is being financed from a 9.0 billion euro (6.2 billion pound) syndicated loan arranged by Saint-Gobain's advisers BNP Paribas and UBS, and is expected to complete around the end of the year.

Saint-Gobain's net-debt-to-equity ratio will double to around 115 percent following BPB's acquisition, from 57 percent at the end of 2004. Although the gearing ratio should be reduced in coming months, Beffa said he did not expect it to come back to levels preceding the BPB deal.

Saint-Gobain expects the merger of its glass-wool unit Isover and BPB to generate around 100 million euros in cost savings as soon as 2007 -- 40 million of which would come from reduced administrative costs and 30 million from transport and warehouse savings.

The company says the withdrawal of BPB from the stock market should bring another 10 million euros of savings, and synergies from sales forces and marketing are seen at around 20 million.

Saint-Gobain said it did not include in its numbers potential growth synergies of around 30 million euros per year, which the merged business could reach as soon as 2008 thanks to an enhanced product range and wider geographical coverage.

"We have important cost synergies but also revenue synergies in the medium term," said Chief Operating Officer Pierre-Andre de Chalendar, who added that Saint-Gobain's industrial reorganisation following the BPB acquisition should be complete by the end of the first quarter of 2006.