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  "documentTitle": "GCP Applied Technologies (GCP)",
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  "presentationDate": "2020-04-30 00:00:00",
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  "notes": "Includes a red handwritten-style arrow pointing from the Jefferies quote to a red-dashed callout box criticizing GCP's late entry into the DIY/smaller-scale projects market.",
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      "kind": "callout",
      "text": "GCP has said it's now targeting smaller projects in SBM, after peers have already made strategic moves",
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      "text": "Sika, which is considered best-in-class in the industry, has benefitted from a disciplined M&A strategy focused on identifying companies with interesting / complementary technologies or companies with market share in strategic verticals / geographies.",
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      "text": "With a conservatively leveraged balance sheet, we believe GCP has the resources to also participate in a thoughtful M&A strategy, but only with effective and knowledgeable board oversight.",
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      "text": "We believe the Company should consider utilizing acquisitions to fill gaps in regional presence or product portfolio.",
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      "text": "The acquisition allows Sika to gain access to Parex's distribution channels and production capacity in mortars. It will also allow Parex to gain access to 70 new markets in which Parex does not currently operate. For Sika, the cross-selling opportunity is particularly strong in China where Parex has established a strong commercial presence and brand recognition.",
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      "text": "The purchase of Parex allows Sika to (a) increase its share in a highly fragmented market, (b) broaden its footprint in Asia (we estimate that Asia revenues will increase from 17% to 20% once fully integrated), and (c) further increase operating leverage.",
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      "text": "We also see the higher interest in DIY as beneficial for building material companies with exposure to such smaller-scale projects. The clearest beneficiary is likely to be Sika's newly-acquired Parex business (catering to smaller-scale projects and customers, with products largely sold through distribution channels).",
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      "text": "\"The purchase of Parex allows Sika to (a) increase its share in a highly fragmented market, (b) broaden its footprint in Asia (we estimate that Asia revenues will increase from 17% to 20% once fully integrated), and (c) further increase operating leverage.\" — Morgan Stanley (February 2019); \"The acquisition allows Sika to gain access to Parex's distribution channels and production capacity in mortars. It will also allow Parex to gain access to 70 new markets in which Parex does not currently operate. For Sika, the cross-selling opportunity is particularly strong in China where Parex has established a strong commercial presence and brand recognition.\" — Bernstein Research (May 2019); \"We also see the higher interest in DIY as beneficial for building material companies with exposure to such smaller-scale projects. The clearest beneficiary is likely to be Sika's newly-acquired Parex business (catering to smaller-scale projects and customers, with products largely sold through distribution channels).\" — Jefferies (April 2020)",
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      "text": "Source: Wall Street Research and GCP's transcripts.",
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      "text": "We believe there is an opportunity to augment organic growth with disciplined and value-adding M&A.",
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