Coverage: Standard Industries to buy German rival for $1.5 billion

German-based roof tile maker Braas Monier Building Group has agreed to be taken over by U.S. rival Standard Industries after its rival roof manufacturer raised its offer to $1.5 billion.

Victoria Bryan of Reuters had the news:

The German company said in a statement on Sunday that Standard Industries had raised its offer to 25.27 euros a share in cash from a previous 25 euros.

Braas Monier’s shares closed at 26.35 euros on Friday but the company said shareholders will receive the equivalent of 28.50 euros per share under the latest offer, because it will go ahead and make a bonus share issue as well as paying an interim dividend of 0.64 euros a share.

The new offer values the company at 1.1 billion euros ($1.2 billion), excluding debt, according to Thomson Reuters data.

Last month Braas Monier announced the plans to grant 3.9 million new shares to its shareholders and said the share issue plus a special dividend would effectively raise the value of the offer to 28.13 euros a share.

Ben Dummett and Natascha Divac of The Wall Street Journal note Standard made an earlier deal in Europe:

The deal further solidifies Standard Industries position as a leading manufacturer of roofing products through its ownership of GAF and Danish rival Icopal, which it agreed in January to acquire for about €1 billion.

In pushing for a higher offer, Braas Monier had cited the cost savings and additional revenues Standard Industries could generate by combining the German manufacturer with its current operations. In November, Braas Monier announced plans to increase its capital from reserves and pay out an interim dividend to try to win a higher offer from Standard Industries.

But earlier this month, a Luxembourg court blocked that move by issuing a temporary injunction sought by Standard Industries. They buyer has agreed to end its litigation against Braas Monier as part of the friendly deal, the companies said Sunday.

The deal will provide “increased stability, diversification and scale,” said Georg Harrasser, Braas Monier’s chief executive. Mr. Harrasser and Braas Monier Chief Financial Officer Matthew Russell will stay with the company after the transaction’s completion.

Patrick McGee of the Financial Times reports on the legal dispute between the two companies:

The dispute goes back to September when Braas’s board rejected the €25-per-share offer as too low. Standard, which already had rights to own 40 per cent of the stock, took the offer straight to shareholders in a tender offer ending on January 12.

Braas responded on November 29 by saying it would issue one new share for every 10 outstanding — an unprecedented move for a German company — effectively creating money out of thin air. In most European countries such a manoeuvre would not be allowed, but Luxembourg — where Braas is headquartered — permits companies to issue new shares without a shareholder meeting.

In addition, Braas said it would pay investors an interim dividend, raising the price even further, to €28.13 per currently held share.

Braas argued that neither move violated the binding terms in the takeover agreement, but it meant that Standard was going to be forced to a pay a premium it had not agreed to.

Standard, however, argued that unilaterally increasing the cost of the deal was not permissible under the EU’s takeover directive — a framework adopted in 2004 to establish common principles and requirements for EU member states. It then convinced the court in Luxembourg to issue an injunction against Braas, prohibiting the German company from issuing new shares.