January 21, 2019 / 1:44 PM / in 4 months

St Gobain hires Goldman to sell building materials group Raab Karcher - sources

LONDON/FRANKFURT (Reuters) - France’s Saint Gobain (SGOB.PA) has hired Goldman Sachs to sell its German building materials business as part of an asset disposal plan aimed at raising cash and improving margins, four sources close to the matter told Reuters.

The logo of Saint-Gobain is seen on a banner on a building construction site in the financial and business district of La Defense in Courbevoie, outside Paris, France, February 19, 2018. REUTERS/Gonzalo Fuentes

Raab Karcher was earmarked for sale in November when St Gobain said it would sell non-core businesses with total revenues of 3 billion euros (under a strategic overhaul overseen by new chief operating officer Benoit Bazin.

Potential bidders for Raab Karcher, which had revenues of almost 2 billion euros ($2.3 billion) in 2017, have already been sounded out, the four sources said, with a formal auction set to be launched in the coming weeks.

French construction materials group St Gobain is looking to reorganize its activities into five new reporting units in an effort to align its business more closely to its markets.

Raab Karcher has sales margins of between three and four percent and may be worth about 500 million euros, one of the sources said, while another said it had earnings before interest and taxes of about 40 million euros.

A spokeswoman for St Gobain declined to comment, while Goldman Sachs was not immediately available for comment.

The sale of Raab Karcher is expected to draw interest from cash-rich buyout funds who have been buyers of industrial distribution assets in recent months.

Lone Star bought Nordic building materials distributor Stark Group in November in a deal worth about 1 billion euros, while in December CVC Capital Partners made a bid for Ahlsell AHSL.ST, valuing the Swedish construction products and tools distributor at about 24 billion Swedish crowns ($2.66 billion).

St Gobain said on Nov. 26 that Raab Karcher was one of three “significant processes” that it had already launched, while more than ten companies of various sizes across all sectors were actively being prepared for divestment.

The two other major deals involve the Xuzhou Pipe site in China Pipe and St Gobain’s silicon carbide business.

Additional reporting by Gilles Guillaume in Paris; Editing by Alexander Smith

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