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Original Source: FD (FAIR DISCLOSURE) WIRE
OPERATOR: Good morning, ladies and gentlemen and welcome to your Saint-Gobain conference call with Mr. Beffa, the Chief Executive Officer. My name is Mark and I will be your coordinator for today's conference. For the duration of the call, you will be on listen-only. However, at the end of the call, you will have the opportunity to ask questions. (OPERATOR INSTRUCTIONS). Over to Mr. Beffa to start your conference call.
JEAN-LOUIS BEFFA, CEO, SAINT-GOBAIN: Thank you. Good morning, ladies and gentlemen. I am Jean-Louis Beffa, the Chief Executive Officer of Saint-Gobain. I'm here with Pierre-Andre de Chalendar, our Chief Operating Officer; Benoit Bazin, our Chief Financial Officer and (indiscernible), our Director of Investor Relations. I am very pleased to have the opportunity to talk to you directly on this important day for Saint-Gobain. As you certainly know, we have today announced a recommended offer of 775 pence per share, which values BPB at approximately 3.9 billion pounds. This increased offer represents a significant premium of 51% to BPB's share price when we made our first approach.
I am very pleased that we have reached an agreement on price for BPB with their Board as recommended to their shareholders. Clearly recommendation has always been important to us and feel what I believe is an excellent deal for both Saint-Gobain and BPB. This has been of course a long process. We have had the chance to evaluate all the aspects in the deal, including the information released by BPB. I believe we have ended in a place that gives value for both Saint-Gobain shareholders and BPB shareholders.
It is very clear that putting our strong worldwide leader insulation business together with BPB, the world leader of plasterboard, gives us the opportunity to accelerate the growth of both businesses and create what we have named the global leader in building interior solutions. This transaction is going to bring to Saint-Gobain, with the impact of BPB, above average growth, greater potential in emerging countries, a very good company with high profitability and a strong free cash flow generation, which, as you know, we like very much to have for our businesses.
There are significant synergies. Not in production. We all know that the processes are quite different. But we know that in administration, marketing, logistics, there are significant costs. Just let me give an example. In nearly all the countries of Europe, you have both the headquarters of Saint-Gobain and of Isover Saint-Gobain and the headquarters of British Plaster Board. It is clear that you don't need duplication of administrative functions for example in those headquarters, which exist in France, Portugal, Germany, Spain, Italy and all the other countries of Europe.
Also the combination of Saint-Gobain and BPB is going to enhance our growth and is going also to allow us to present some combined product offering. You certainly know that more and more clients are desiring to have intelligent solutions, which makes plasterboard products very well integrated with insulation products so that you have the advantage of the two, of course, products, and especially an extremely good way to get inside the houses something with a lot of advantages in both energy consumption and sound reduction.
We are very confident that we can achieve these synergies very quickly, maybe in two years, certainly in three years. And we have very carefully evaluated those synergies. We are going to detail them in presentations to analyst meetings, which we intend to do on Monday, next week, one in Paris and one in London. But I want to give you immediately the number we think that those synergies can easily reach EUR100 million per year, which is about double the range that we have seen most frequently in the studies making the calculations of returns for Saint-Gobain, which were more at EUR50 million. I am sure we will all discuss this point.
So to summarize, we are in the criteria by doing what is clearly a full price. We are in the criteria of Saint-Gobain financial targets. We are going to be significantly relutive (ph) for the first year 2006 of the acquisition in the range certainly of somewhere about 10% and we consider we can create value above a weighted average cost of capital of 7% on year 2008. We do think that this advantage to have the recommendation clearly leaves any level of uncertainty for the deal and I think our shareholders appreciate that. Also it is a good step to psychologically improve the relationship with …