Good morning, ladies and gentlemen. I welcome you to this press conference this morning, And I thank you very much that you made it in such a big number to Tufinwiz on such short notice. I also welcome everybody who follows us on the web this morning. As you could see from the press release announced this morning, we could find an agreement with Saint Gobain and with the family to put an end on this 3.5 year dispute we have over the ownership of Sika. In the name of the Board and management, I can say that we are all very happy and very pleased with the outcome.
We have achieved all the targets we were working for over the past 3.5 years. And I will explain a bit more in detail the transaction and the impact on Sika. And then afterwards, our CEO, Paul Schuller, will talk about the consequences for our growth strategy. Let me first come to the highlights of the transaction. What does it mean for Sika?
As a whole, most importantly, we transfer all the control premium that was before with the family to all shareholders. That's for sure the most important point and outcome. As we combine this transaction with a capital reduction, it will also be immediately accretive in terms of earnings per share in the area net of about 5% to 6%. We will also have a much more efficient capital structure in our balance sheet, and we will be able to create a modern government's model, which I will come to in a minute. And most importantly, we will be able to even accelerate the implementation of our growth strategy.
What is the transaction? When you analyze it, you have to look at it as a whole comprehensive transaction, but consisting of 2 steps. For this transaction, we pay a control premium of SEK 754,000,000 compared to the closing Wednesday evening, which means a 23% premium calculated on the total package as wage holds. This is to compensate for control, and it has to be put in perspective. For instance, with the premium, Sangerberg was ready to offer the family of about 70%.
So it's about 1 third of that premium at that time. And it has to be put in perspective of the total capitalization of Sika of close to SEK 20,000,000,000. So we're talking about 4% of total capitalization of Sika Company. The transaction is implemented in 2 steps. We buy in a first step 6.97% of our capital and at the price of 2,080,000,000.
This price includes the total of the control premium, and we will use those shares for cancellation and hence reduce the capital of our company. After the lockup of 2 years, we have the right of first refusal for the other 10.75 percent still hold by Saint Gobain. And we have this right of first refusal forever as long as Saint Gobain wants to keep those shares. So we have full control on where these shares go. This 2 step process has a big advantage for us.
We can keep the strong investment grade credit rating, which is very important for the continuation of our growth strategy. And the transaction is fully funded by UBS, and we can choose the refinancing in terms of time and means. We have all the options open. The transaction includes also the end of all the litigations, which there are quite many. And indirectly, it means that the decision of the Cantonskericht with regards to the voting rights is now valid.
In order to implement this modern governance structure, we will next week invite for an extraordinary shareholders meeting scheduled for June 11 with the main topics you see here on the screen. We will cancel 6 0.97% of shares, by the way, of capital reduction. This means the accretion of earnings per share for all shareholders I was mentioning before. We will vote on an introduction of a single class registered share, so one share, one vote. We will propose a share split of 1 to 60 to make our shares more tradable.
We will remove the currently existing opting out, and we will remove the transfer restriction, the 5% voting rights restriction, which we applied up to now. And we also will propose to discontinue this special expert committee. What is the financial impact on Zika? We still continue with a strong balance sheet. Equity ratio will initially go down to about 25%.
EBITDA net debt over EBITDA will be around 2. But with our strong cash generation, we will be able to improve those indicators very quickly and hence have enough resources for external and internal growth in the future. And again, this transaction is immediately EPS accretive for all shareholders. As you could see from the press release, Saint Gobain will remain shareholder in Sika, and yes, is the biggest shareholder at this time in Sika. After the capital reduction, they will hold 10.75% in Sika.
But I can assure you we have full control over this shareholder. They fully support the 1 share, 1 vote decision and all the other decisions going with this at the extraordinary general assembly. And they are quite heavily restricted in what they can do with their stock. You can see it on the slide here. So for 2 years, there is a lock up, mainly tax reasons for that.
Then there is a standstill agreement up to 6 years, where in the second in the last 2 years, they might slightly be able to increase their participation. And the most important, the shares always have to be offered first to Sika as long as they hold a stake in Sika. And for 6 years, they are not allowed to do a public tender for Sika. So quite a lot of restrictions around this shareholding. And the consequence is that for Sangamo, this is basically financial participation in Sika.
To summarize, I think we have to put this transaction in perspective. And I want to show on this chart the value creation Sika could do in the past 5 years. We could show a total shareholder return of 2 72%. This equals about CHF12 1,000,000,000 And the chart compares the value creation with our peers. We did about 3 times the value creation of our peers.
And this transaction assures that we can continue with our value creation. And I think this has to be seen in this overall scheme. And it becomes understandable that board and management, we are very pleased with the outcome of this transaction. And it was worthwhile fighting for this in the past 3.5 years. I now want to hand over to Paul Schuller, who will talk to us about how we continue our success story.
Thank you.
Thank you. Good morning. Glad to spend the long weekend with you guys. It's very nice to see you again. And if you look at the share price there in the last years and especially on the left side, on this side where the big drop came and then the development of the share, I think it's a very successful story.
This story is based on success on the company of our employees on the grow rate. And if you look at our net sales increasement over the years, it's a nice good increase. And also on the EBIT margin, it's a great increase. So this is based on the success of the company and our 5 pillar strategy for market penetration, for the innovation, new products, emerging market, all the acquisitions and also our values. We really have a high speed with a successful target market concept.
We have mega trends driving our growth. We have a lot of new opportunities. We have 2 17 new patents. We have 20 global technical centers, and we opened 27 new plants in the last 3 to 4 years. And we acquired 17 companies with an amount of around EUR 705,000,000.
And as probably know, we have a strong corporate culture and very motivated people. And I think this is the time now the management look forward. It's a time we can now focus on the business. We don't spend now weekends on lawyers, even our like all the lawyers. Thank you for your support.
But glad to go somewhere else now on the weekends. And I think we can focus on the business. And with this focus on the business, we first can confirm the strategy 2020. So we will say that. But however, we feel very confident that we can review now and update it and can come out with new targets a year earlier than planned.
And we will present that then from bottom up, and we will work to get the top down. And we will present the new targets in 2019. So the 6 to 8 annual grow rate, I think we can continue with this one. We then have 30 new plants, 105 new subsidiaries, 14 to 16. So we will work over this target and come up with new targets in due time.
But we feel good that with this one, we can grow even faster. We have now a huge market potential if we look at the market size. First, the market size is growing from €17,000,000,000 to €80,000,000,000 and still continue. Then we have the 7 target markets where we have not enough market share everywhere around the world. So also there, huge opportunities.
And with our people, we have 100 countries. We have strong management team committed and now can focus on the business. So we feel very strong that also the growth story goes on. And on the acquisition side, now we have not anymore family shareholders. They don't want to invest in big deals or bigger deals.
We have now with the new structure the opportunity to find new acquisition, find bigger acquisition and even increase the speed there. So on one side, we can grow with our organic growth. We are strong there. And other sides, we are able now to locally without and see other nice companies to increase our leverage. Overall, the first 2018, we have a strong growth strategy, and we work very well.
We have excellent first 4 months. It's very good. It's the first time we want to overachieve SEK 7,000,000,000. As you remember, we had SEK 6,000,000,000. Now we want to go to SEK 7,000,000,000.
Confident we can do that, and we already announced that we will grow higher than 10%. We have the challenge with the raw material that we used to that, and we will increase our price. We will leverage. We have more efficiency. So overall, we also want to improve our operational EBIT into 'eighteen.
So the outlook we can confirm and confident we can deliver.
Thank you. Let me come to the summary and again repeat the highlights of the transaction. Most important, we transferred the control premium to all shareholders. The transaction is immediately EPS accretive. We will be able to even accelerate CCaaS growth strategy, as Paul has just shown.
And we will review our targets and come up with a new target set early 2020. We will have a more efficient capital structure, and we will be able to create a modern governance model. So I can just again say we've achieved all the targets we were standing for in the past 3.5 years. And it's the moment to thank, first, the management and all the employees of Sika. With the tremendous value creation, they made this solution possible financially.
Then thanks to all who helped us from the outside, legal side, finance support, also the public relation support we got. Then a special thanks to the core team who worked on this project very, very hard over the last 3.5 years. And then also to all my colleague board members who did stand for this project over the past 3.5 years. And we are all glad we could bring it to a positive end today. Thank you for coming, and we are open for questions.
Dan Pramgren from Vontobel. Good morning. First of all, thank you for having fought so long really this really terrible fight and not for having gone the easier way. I think in the beginning, obviously, it looked very, very dark. And now you have been able really to sign a deal, which resulted really in my view in a win win win situation.
When looking back, how much impacted despite your operations, your ability to retain good people, your ability to find new good people, your ability to do acquisitions, also larger acquisitions. So what should we expect from now on in gaining new talents, being even more active in acquisitions, etcetera?
Well, I can tell our sales guys out here, the KL, the people. So it will be quite an impact. We really had even if we always try to focus on the business, we spend many hours in discussing, find solution. So from that side, we are can grow faster. I think the people really leave now.
There's still a discussion at all the meetings. On the acquisition side, I already said, we're always very blocked by the major shareholder, not to make big acquisition. We always had an internal fight. Now with the new structure, I think we really can explore the possibility of Zika. So we believe it's a good impact.
We will show it in 2019 when we have the strategy, and I think that's what we go for.
You also had, in some cases, acquisition targets, which we are not ready to sell as long as the situation is not clear. And now the situation is clear, and so we can go back to some of those targets.
Excellent. And then one technical question. Did I get it right that Saint Gobain can slightly increase their stake from 10% to 12% in the coming years, but not to do a takeover? No,
that was a request on from their side. We don't understand exactly why. This was a concession we had to do. But it's a minimal increase and not really an issue.
Okay. Excellent. Thank you, Paul.
More questions? Yes.
Thank you. Patrick Grafaeys, UBS. Three questions, please. The first is on the representation on the board. Will the family exit immediately at the extraordinary general meeting?
And do you know will Sankopay ask for a seat? Or will they refrain from that?
Very good question. No family and all the conflicted board members have stepped down as of today. So no further representation of the family on the board. And Saint Gobain will not have a board seat. It's also not possible as they are a competitor to us.
And we will obviously now work on evaluating additional board members for latest next general assembly.
Okay. And then the 6.97% you're buying back. Can you give us more color? What was the thinking behind this number? Why not more?
Why not less?
Good point. The structure of this transaction is, to a large extent, is driven by tax optimization. And this is also the reason why Saint Gobain wanted to stay as part of the shareholding and needs 10% minimum for these tax reasons.
And the last question is just a quick follow-up on Bernd's question on M and A. In the past, you've said the family or the situation did not impact your ability to do deals. And you were very active more recently, right, since the beginning at the end of 2017. So what has really changed? And where do you see now with the new balance sheet the firepower you have?
I think we did a great run. But if you look at our acquisition, we did probably 3 or 4. Even last time, we already told you that we want to go for bigger ones. Bigger, I mean around 300, 400, 500, even bigger ones. With the new balance sheet and the new shareholders, I think we can go there.
So you will see some nice acquisition in future, and we have the firepower.
More questions?
Firstly, on acquisitions, sorry, you say up to CHF 500,000,000. Is it possible you might go bigger? I mean, you talked about the
organization in the We it's clear. We always see an acquisition as a platform to grow. That's very important. And then if strategically it fits either for market extension or it fits for technology. And if it's in the right strategy, we are able to go even higher.
And my second question is whether the EGM would also propose compensating the board members for their loss of compensation over the last 3 or was it 4 years? You can assume so, yes.
We are not sure yet.
Then the stream included, I think that
You're right in your press release that you will seek to further expand the relationship with Saint Gobain. So which kind of business will you work with Saint Gobain?
There is it is a part of the contract. And we've done, obviously, in the beginning when this whole thing started already some analysis. We'll Sanko is one of our biggest customers and that will be the base and we'll see what will be possible.
It's in the contract that you work together.
Philippe, La Jaffee. Where do you see the best organic growth opportunities in the next couple of years?
We are in the very lucky situation that in our 7 target markets, we have everywhere opportunity to grow. I think we do urbanization mainly on the construction side, where we have from concrete to roofing to waterproofing, great opportunities. If you look at the industry side with the industry, with the car production, we have freight opportunities, also great. Then we look at our excellent organization. So one is territory wise and one is better market penetration.
So we see it everywhere. And I think in the moment, we have more than 55 companies. They grow double digit very often. So we're very confident we can continue this.
More questions?
Oliver here, Reuters. With the new shareholder structure and without a major anchor shareholder, do you think you might become a takeover target?
I cannot say. It might be, might be.
Concerning your cooperation with Saint Gobain, you have had a pretty grueling 3.5 years. Doesn't that also affect your ability to cooperate with sort of someone that might have been in a sort of antagonistic role in the past?
No, we are very nice guys. We are easygoing and we are good customers and we will find a way to see what we can do.
So far, it has not impacted the operational relationship. Any more questions?
Yes?
What do you say that the court in Zug, it took so long time to make a decision? I mean, I think companies, investors, everybody depends on fast decision making. And now it took about 1.5 years since the Kantonskrieg has published a decision, and you don't have anything. So it seems to me quite a long time and not very positive to make a business in circumstances.
I cannot speak for the court, so I don't know why it took so long. But in the recent time, they knew that we were talking. Any other questions? Doesn't seem to be the case. So again, I thank you for coming on such short notice.
And we offer some drinks and some bits and bites to eat. And I'll see. And thank you for coming. This ends the press conference of this morning. Thank you.