The chief executive of Saint-Gobain has rejected calls for the French construction material group to break itself up, saying the recent rise in the company“s share price was not related to speculatio…
The chief executive of Saint-Gobain has rejected calls for the French construction material group to break itself up, saying the recent rise in the company“s share price was not related to speculation that the company was about to sell divisions. “Saint-Gobain has achieved very nice financial results which are due to the strategy we have followed so far”, Jean-Louis Beffa told the Financial Times. “To break apart the group at this stage would not make any sense and has no reality”. Mr Beffa, aged 65, is stepping down in June 2007 after 21 years as chief executive, although he will remain for three years as non-executive chairman. Some observers believe that Pierre-Andre de Chalendar, Mr. Beffa“s successor as chief executive and currently Saint-Gobain chief operating officer, is likely to come under pressure from investors to preside over large divestments as a way of creating more focus around the company“s core business of construction material manufacturing, including glass. Brokers at ABN Amro think the company should dispose of “non-core” assets worth EUR 20 billion (USD 26 billion) while others have labelled the company“s operations in fields like ceramics, plastics and abrasives as underperforming. While Mr Beffa has indicated that he is willing to consider selling the company“s bottle-making activities he said only a limited amount of divestments would make sense. “We are building value for shareholders with our current strategy (of having a broadly based group)”, Mr Beffa said. “There may be businesses (such as private equity companies) which would be willing to take over parts of Saint-Gobain and do this through heavily leveraged financing deals that take advantage of low interest rates. But I“d much rather keep the business intact, and use the low interest rates to build up acquisitions for ourselves”.