Saint-Gobain: Acquisition of CSR for AUD 4.5 billion Is Consistent With Group Strategy

Saint-Gobain has entered into a definitive agreement to acquire CSR, a building products producer in Australia, for an enterprise value of AUD 4.5 billion (EUR 2.7 billion). We believe the likelihood of CSR shareholders accepting the offer is high given the 33% premium, above the one-month volume-weighted average price and 13% premium to our stand-alone AUD 8 fair value estimate for CSR, prior to the announcement. The acquisition is consistent with Saint-Gobain's strategy to be the leader in light construction materials, which are more energy-efficient and easier to install than traditional building materials. The deal will also bolster its geographic presence outside of Europe where the outlook for construction activity remains weak. We maintain our no moat rating and EUR 68 fair value estimate.