Through the acquisition of Parex, Sika is expanding its product range, improving market access, and capturing a market-leading position in a number of markets.
Two days after conclusion of the takeover, the sales teams of Sika and Parex exchanged customer data, and just a short time later Sika employees were starting to receive training on the Parex products and vice versa. “The quicker we merge the teams, the better we will be able to exploit the full potential of both companies", explains Romeu Martinelli, General Manager of Sika Brazil.
Rapid Integration is the Key
Sika has extensive expertise in the acquisition and integration of companies. In the last ten years, 50 firms have been taken over.
"The strong corporate culture at Sika is a decisive factor behind the complete commitment shown by everyone and the way teams quickly grow together. " Philippe Jost, Head Construction
"That’s crucial, given that acquisitions are a cornerstone of the Sika growth strategy. It allows us to add products that complement our existing portfolio and improve market access. If we are to continue expanding our market position and achieve our ambitious strategic goals, we need both organic and inorganic growth."
Leveraging Potential in a Short Timeframe
In the very first meetings with Direcional Engenharia, Romeu Martinelli’s sales team flagged up the benefits for the client and illustrated the expanded portfolio. Direcional Engenharia, one of Brazil’s largest construction companies specializing in the area of social housing, was offered an overall package encompassing bathrooms, flooring, lift shafts, and other areas – and successfully.
All Direcional Engenharia’s construction projects in the federal states of S?o Paulo and Rio de Janeiro are supplied with specialty waterproofing mortar by Sika and high-quality adhesive mortar by Parex, to the value of some CHF 1 million. Sika’s sealants and adhesives offer additional potential for further solutions in the construction projects of Direcional Engenharia. ?
Efficiency, speed, and sustainability are crucial factors in social housing construction, both in the procurement process but also later on the building site. Sika and Parex as one team is the ideal partner. Direcional Engenharia can now obtain a comprehensive solution from a single source, while at the same time keeping its procurement workload low. The high-quality, sustainable products, which fulfill all the safety and quality requirements of the Brazilian construction group, are easy to apply, can be processed rapidly, and contribute to the longevity of the constructed apartments.
Structured Process, Highly Motivated Team
How well the integration of a new company succeeds can be seen above all in the extent to which synergies are achieved, and in what timeframe this happens. In the acquisition of Parex, these two metrics were impressive. After just half a year, it was clear to Philippe Jost that the upper end of the projected synergy bandwidth of CHF 80–100 million would be reached. “This is only possible because we know exactly what matters for integration to succeed. It takes a very clearly structured process and highly motivated employees.”
The new organizational structure came into effect as soon as the acquisition was concluded in May. “From the first day on, the Parex managers all reported to their new line managers and no longer to head office in Paris", explains Philippe Jost. Four months previously, after Sika had submitted a binding takeover offer, Philippe Jost’s coordination team got down to work. In all 23 countries where Parex has a presence, the optimal structure was sought, focusing on cross-selling, procurement, operational efficiency, product formulations, and administrative costs.
Sika Remains Committed to Acquisitions
Even after the takeover of Parex, Sika is still on the lookout for interesting companies. The construction chemicals market is heavily fragmented, with its ten largest players together accounting for a market share of less than 40%. “This opens up huge opportunities for us", comments Philippe Jost, “because size does matter more and more as legal requirements become stricter and customers in the building sector become increasingly international.”
Each year, Sika scrutinizes more than 70 potential takeover candidates. Only very few of them satisfy Sika’s rigorous requirements.
Selection follows clearly defined criteria. For a company to be a fit for Sika’s growth strategy, it needs to fulfill at least one of three criteria: market access for Sika products is improved, the company enjoys a strong position in individual markets which Sika is unable to build up itself over the short term, or it possesses outstanding technology that logically complements the Sika product portfolio. In the case of Parex, all three of these boxes were ticked, which explains the big success of this acquisition.