French construction major chases growth in Middle East

July 10, 2024, 2:08 PM

A German glass factory owned by French conglomerate Saint-Gobain. The company bought businesses in Egypt and Saudi Arabia last year

Saint-Gobain to buy Dubai’s Fosroc
Group aims to harness Saudi growth
Fosroc expects $487m sales in 2024

Saint-Gobain’s $1 billion takeover of Dubai’s Fosroc highlights the growing importance of the Middle East to the company and the construction industry, according to executives at the French conglomerate.

The all-cash transaction for Fosroc, which makes construction chemicals, was agreed at the end of last month. Saint-Gobain expects the deal to close in the first half of next year, pending regulatory approvals.

Thierry Bernard, chief executive of construction chemicals at Saint-Gobain, says it is “the perfect next step” as the group seeks to harness Saudi Arabia’s development push and India’s growth, and to focus more on sustainability.

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The takeover may also shore up an increasingly complicated global supply chain for the French multinational.

“Fosroc is complementing two things, a geographical positioning which is super-attractive to the group, in the Middle East, India and Asia-Pacific, as well as our product offering,” Bernard says.

Fosroc, whose owners are British, has manufacturing locations in Jeddah and Dammam in Saudi Arabia, Dubai in the UAE and Jordan. It also has a joint venture in Egypt and a very “strong presence in India and Bangladesh”, he says.

The manufacturer, which has 20 facilities overall and 3,000 employees, expects $487 million in sales this year, according to a press release announcing the deal.

Since 2019 Saint-Gobain has acquired six sustainable construction companies in the US, Canada, India, Malaysia and, as of this week, Australia.

Saint-Gobain, whose origins date back to Paris in 1665, has bought an additional 35 companies in the construction chemicals sector, across the US, Mexico, Brazil and Malaysia.

It bought two more businesses in the Middle East and North Africa last year: Drymix, a ready-mix mortars manufacturer in Egypt, in June; followed by Izomaks, a Saudi maker of waterproofing products for flooring and roofing, in November.

With the takeover of Fosroc, the French group expects to double its presence in the construction chemicals industry – which has a global market size of close to $100 billion.

“The beauty of this acquisition is it completes the offering we have,” says Antoine Ghazal, Saint-Gobain’s chief executive for Gulf countries.

The group has long-held expertise in residential work while “Fosroc is very strong in infrastructure, oil and gas, and industrial,” Ghazal says. “We can leverage this know-how across all our entities in the Middle East.”

Construction chemicals products include admixtures (typically used to enhance the performance and sustainability of concrete), sheet membranes, acrylics and other waterproofing, sealants and adhesives for stones and tiles, mortars, and protective coatings for facades.

Some of these products, such as cement, sand and mortars, are typically sourced locally. Others have more complex chemical structures and require ingredients that must be procured from around the world, especially the Asia-Pacific region, according to Bernard.

“These product families have suffered from supply chain disruptions from the Red Sea crisis recently,” he says. “Those people who are capable of manufacturing products locally with maximum intensity of their local supply chain have got an edge.”

As the Middle East construction market continues growing, Bernard says: “The need to integrate more manufacturing capacity in the Middle East will be a growing trend for most of our businesses, but in particular for construction chemicals.”