Activist investor Bluebell Capital is calling for Saint-Gobain, one of France’s oldest industrial companies, to reshape the business and replace its chair to counter what it called an “underwhelming performance”.
Bluebell, a small hedge fund with some €250mn in assets, came under the spotlight last year when its campaign at consumer goods group Danone led to a management overhaul — one of the most prominent activist upsets in France to date.
At Saint-Gobain, which has a market value of just over €27bn, the fund’s holding is under 0.5 per cent, a person familiar with the matter said.
Bluebell is calling on Saint-Gobain to spin off, list or sell its distribution operations and focus on its core building-materials business to help boost the stock, according to letters exchanged with the French group’s chair Pierre-André de Chalendar and chief executive Benoit Bazin since December and seen by the Financial Times.
Bluebell is also pushing for Saint-Gobain to replace de Chalendar, who previously held the combined CEO and chair role for more than a decade, with an independent chair at a June shareholder meeting.
“The building materials industry offers significant opportunities given the long-term requirements to renovate the building stock in Europe and North America,” Bluebell partners Marco Taricco and Giuseppe Bivona wrote in a December 13 letter. They were referring to major drives by governments, including that of France, to improve the energy efficiency of new and old homes and offices to meet climate change goals.
“These observations are against the backdrop of the underwhelming performance of Saint-Gobain in recent years, both from an operation and total shareholder return standpoint,” they wrote.
Saint-Gobain declined to comment.
The group’s share price performance has long lagged behind some of its rivals — including Swiss chemical company Sika, once a Saint-Gobain takeover target — and it has been under scrutiny for years over a structure seen as too top-heavy.
Bluebell’s intervention comes after some recent signs of improvement at the company, which was created in the late 17th century to rival the Italian glassmakers of Murano and is known for making the Hall of Mirrors in the palace of Versailles.
Under Bazin, a company veteran who took over as CEO last year, Saint-Gobain has pursued share buybacks and disposals of non-core units such as a bathrooms business or reduced its exposure to countries where it had a small market share.
Since 2018 it has also reorganised the group by regions and eliminated some management overlap. There have been acquisitions such as that of chemicals group Chryso, as it has invested in processes that can reduce the carbon footprint of materials like concrete, a major challenge.
Saint-Gobain’s once-stagnating operating margins reached more than 10 per cent in 2020 and 2021, although they still lag behind some peers. Its shares are down 15 per cent this year — a smaller drop than suffered by rivals such as Kingspan — but they have severely underperformed over the past five years.
Some analysts have said Saint-Gobain has the potential to improve performance as things stand.
“We believe Saint-Gobain’s longstanding valuation discount has scope to close given [it] is the main beneficiary of the EU renovation stimulus,” analysts at JPMorgan said in a January note, adding that the operational performance was improving.
Bluebell met Bazin in March, according to one letter. The fund said it remained convinced that there were few competitive advantages to keeping the distribution business, which also sells products other than those made by Saint-Gobain.
It also insisted on replacing de Chalendar, given the handover to Bazin had now had time to take root. In France it is not unusual for former bosses to stay on as chairs even as they relinquish some power, but Bluebell argued his departure would be better for Saint-Gobain’s overhaul.
“It is entirely best practice to have an independent chair for a listed company with no controlling shareholder,” the fund said in a letter to Saint-Gobain from mid-March.