Glass Industry

Glassmaker Saint Gobain Gets Reinforcement

French glass-maker Saint Gobain's plans to shift its business operations towards building materials and away from bottles got an endorsement from industrial investor Wendel, which is taking a 6.0% stake in the company.

The development, and speculation that Wendel might be interested in a full takeover, gave Saint Gobain a big boost on the stock market. Its shares were trading up 3.18 euros ($4.50), or 4.5%, to 72.61 euros ($102.91), at midday in Paris. Lafarge (other-otc: LFRGY - news - people ), another French maker of building supplies was trading up 1.85 euros ($2.55), or 1.9%, to 108.42 euros ($153.80). In London, Wolseley (nyse: WOS - news - people) was trading up 16.50 pence (33 cents), or 2.2%, to £8.22 ($16.66).

Wendel (other-otc: WNDLF - news - people ) fell 2.3%, or 2.77 euros ($3.92), to 118.02 euros ($166.94). The company, which began life as a French steelmaker in 1704, now functions as a kind of closed-end fund specializing in European industrial businesses. It said its 1.6 billion euro ($2.3 billion) Saint gobain stake was a "long-term investment."

"This investment in a solid listed company with strong growth potential takes place within the framework of Wendel's long-term strategy," the company said on Wednesday evening. It has now become Saint Gobain's second-largest shareholder.

An analyst who spoke on condition of anonymity said that if Wendel was interested in making a take over bid it would happen later rather than sooner.

Still, the backing of a major investment company is good news for Saint Gobain and is being seen as confirmation that the company will be able to deliver on the restructuring program that it has promised, said analysts at Exane BNP Paribas in a note to investors.

The company is in the midst of restructuring to focus on building materials rather than packaging, an area which it has dabbled in in the past. The company's management has been accused in the past of not fully utilizing its assets and is expected to make substantial gains by selling off some of its properties and then using the proceeds to acquire new businesses.

Source: Forbes