Displaying items by tag: Acquisition

Brazil: InterCement, part of the Camargo Correa Group, has now signed an exclusivity contract with Companhia Siderúrgica Nacional (CSN). CSN is interested in acquiring its operations in Brazil and Argentina. The contract is effective until 12 July 2024 and is part of efforts to address the company’s debt, which the market estimates at over US$1.5bn. The contract also involves the potential purchase of shares representing 100% of its capital. The value of the transaction is part of current negotiations, but it is reportedly valued at around US$700m, according to CE Noticias Financieras News.

InterCement operates plants in Argentina, Brazil, Paraguay and Egypt, as part of Camargo Correa's cement business divestment plan. Previously, in June 2023, InterCement divested its subsidiaries in Mozambique and South Africa.

Malaysia: Heidelberg Materials has announced its acquisition of ACE Group, a supplier of pulverised fly ash, effective 1 May 2024. Reusing fly ash from energy generation contributes to reducing the CO₂ intensity of composite cement. When used as an additive, fly ash can replace part of the energy-intensive clinker and thus reduce the CO₂ intensity of the cement.

The acquisition includes ACE Greencemt Venture, ASAS Asia and AGP Logistics, with the leadership team from ACE Group continuing to manage the operations post-acquisition. Both parties have agreed not to disclose the financial terms of the transaction.

Cemex announced this week that it is preparing to sells its operations in the Philippines to a consortium comprising Dacon, DMCI Holdings and Semirara Mining & Power. Rumours of the divestment first started to appear in the media in February 2024.

The main part of the deal covers Cemex’s cement subsidiaries, APO Cement and Solid Cement, which have been valued at an enterprise value of US$660m. However, this becomes confusing because the actual selling price is the enterprise value minus the net debt and adjusted for the minority shareholding of one of the parent companies, Cement Holdings Philippines (CHP). The deal also includes the sale of a 40% stake in APO Land & Quarry and Island Quarry and Aggregates. Based on a press release issued by CHP to the Philippine Stock Exchange, the actual cost of the divestment appears to be around US$305m. It is hoped that the divestment will complete by the end of 2024 subject to regulatory approval from the Philippines Competition Commission and other bodies.

Cemex entered the market in 1997 when it acquired a minority stake in Rizal Cement. It then built the business up to a cement production capacity of 5.7Mt/yr from its two main integrated plants, the Solid Cement plant in Antipolo City, Rizal and the APO Cement plant in Naga, Cebu. However, CHP has endured a hard time of late, with falling annual operating earnings before interest, taxation, depreciation and amortisation (EBITDA) since 2019 and falling net sales in 2022 and 2020. The bad news continued into 2023, with net sales falling by 17% year-on-year to US$300m in 2023 from US$356m in 2022. It reported a loss of US$35m in 2023, double that of 2022. The company blamed the fall in sales on lower volumes. It noted that prices were also down and energy costs had grown.

The three companies buying CHP are all controlled by the Consunji family so effectively DMCI Holdings is acquiring Cemex’s operations in the Philippines. The group focuses on construction, real state, energy, mining and water distribution. It previously announced in the late 2010s plans to build one integrated cement plant on Semirara and three cement grinding plants at Batangas, Iloilo and Zamboanga but these plans didn’t seem to go anywhere. Later it was linked to the proposed Holcim Philippines sale in 2019, although the subsidiary of Holcim eventually gave up on the idea.

This latest attempt to enter the cement business underlines DMCI Holdings’ intent and the group has immediately started saying what it plans to do next. In a statement chair and president Isidro A Consunji admitted that cement demand in the country was ‘soft’ but that it is expected to rebound due to the Build Better More national infrastructure program and an anticipated fall in internet rates. Consunji added, “We recognise CHP's operational and financial issues, but we are positive that we can turn it around by 2025 because of its ongoing capacity expansion and the clear synergies it brings to our group.” He was also keen to play up that CHP is currently building a new 1.5Mt/yr production line at its Solid Cement plant with commissioning scheduled by September 2024. DMCI plans to reduce CHP’s costs through various synergies including supplying it coal, electricity and fly ash from Semirara Mining & Power.

The acquisition of CHP by DMCI Holdings is the biggest shake-up in the local cement sector in a while. DMCI has long harboured ambitions in heavy building materials and now it’s close to becoming a reality. As evidenced by its statements following the official announcement of the deal it is already thinking ahead publicly to soothe shareholder concerns. What will be interesting to watch here is whether it can actually pull it off and whether it will face trouble from imports. Readers may recall that the Philippines cement sector has long battled overseas imports, particularly from Vietnam. Despite anti-dumping tariffs though the Cement Manufacturers Association of the Philippines (CEMAP) warned in January 2024 that workers could be laid off due to continued competition from imports. Good luck to DMCI.

India: Dalmia Bharat expects to conclude its acquisition of Jaypee Cement by the end of September 2024, six months later than previously anticipated. The Hindu Business Line newspaper has reported that the group attributed the postponement to ‘procedural delays,’ including pending approvals from banks, on-going arbitration between Jaiprakash Associates and UltraTech Cement and some ‘lack of clarity’ around existing joint ventures between Jaiprakash Associates and state-owned Steel Authority of India.

Dalmia Bharat said “We are progressing in the right direction. These are procedural delays over which we have no control.”

India: Ambuja Cements will acquire the grinding unit of My Home Group in Tuticorin, Tamil Nadu, for US$49.6m. The unit has a capacity of 1.5Mt/yr. The acquisition is spread across a 24.6-hectare site near Tuticorin Port and comes with a long-term fly ash agreement.

The CEO of Cement Business at Adani Group, Ajay Kapur said "In addition to the infrastructure and geographical advantages, Ambuja Cements will also inherit the existing dealer network and retain current employees, facilitating a smooth transition and enabling the rapid ramp-up of utilisation."

The total cement capacity of Adani Group now stands at 78.9Mt/yr.

South Africa: Afrimat has received approval to acquire all of Lafarge South Africa and its subsidiaries. The acquisition has been structured as a locked box transaction, effective 31 December 2022, and the purchase is valued at US$6m. Afrimat also agreed to repay its loan amounts owed equating to US$47.8m. Afrimat confirmed the acquisition of the LSA Group, part of the Holcim Group, on 10 April 2024.

CEO Andries van Heerden said "The time was perfect for Afrimat to return to its roots of quarrying and aggregates to support long-term diversified sustainability across the group." He added that CFO Pieter de Wit will serve as the full-time integration manager to ensure integration of the two entities.

Pieter de Wit said "This exciting deal forms part of the Afrimat group’s ongoing diversification strategy. It will increase Afrimat’s offering in the construction materials space, by expanding the group’s quarry and ready-mix operations nationally."

The deal will bring 800 Lafarge employees to Afrimat. The acquisition also includes Lafarge's fly ash operations and a grinding plant. Funded primarily in cash, Afrimat's move comes at a time when the construction materials sector is experiencing increased demand, driven partly by state initiatives and a ‘robust’ residential building market in coastal regions.

US/Austria: RHI Magnesita (RHIM) plans to acquire Resco Group for US$430m. The acquisition of Resco will add fireclay and pyrophyllite-andalusite mining operations in the US to its existing magnesite and dolomite operations across Europe, the US, Brazil and China. Furthermore, RHIM aims to transfer ‘significant’ production volumes from non-US plants to Resco's US facilities. The completion of the acquisition is anticipated in the second half of 2024.

China: Huaxin Cement grew its revenue and profit in 2023 by growing its concrete market domestically and increasing its international business. Its revenue rose by 11% year-on-year to US$4.67bn in 2023 from US$4.21bn in 2022. However its operating revenue from cement and clinker declined. The group’s net profit increased by 2% to US$382m from US$373m. Its cement sales volumes grew by 2% to 76.8Mt from 75.3Mt. Concrete sales volumes mounted by 66% to 27.3Mm³.

The share of its international business grew by 16% in 2023 from 13% in 2022. Notable acquisitions in 2023 included the purchases of Oman Cement and InterCement’s assets in Sub-Saharan Africa.

India: UltraTech Cement plans to acquire a 26% stake in O2 Renewable Energy for around US$2m. It is making the purchase to support the energy requirements of its plants from renewable sources, according to the Times of India newspaper. O2 Renewable Energy is currently building a solar power plant in Karnataka that is expected to generate 35 – 48MW.

India: UltraTech Cement says that the Competition Commission of India has approved its proposed acquisition of Kesoram Industries’ cement business. The Business Standard newspaper reported that the demerger of the business from Kesoram Industries into UltraTech Cement is scheduled for November 2024. The deal has an enterprise value of US$914m.