Displaying items by tag: Acquisition

Ukraine: NEQSOL Holding Ukraine has filed an application to the Antimonopoly Committee of Ukraine (AMCU) to acquire a stake in Ivano-Frankivskcement. The group will take a loan from ‘leading international’ banks to pay for the stake.

NEQSOL Holding Ukraine manager Volodymyr Lavrenchuk, said “We are hopeful for an approval of the new deal by the AMCU so that we can welcome the high-tech enterprise Ivano-Frankivskсement into the NEQSOL Holding group of companies. We recognise the long-time outstanding results achieved by the Ivano-Frankivskсement management team and staff, who have created one of the most state-of-the-art cement plants in Europe.” He added “Our group of companies has successful experience in financing, including engagement of international financial institutions, which will help to secure the required investments for maintaining a high rate of growth of the cement plant.”

Spain: Corporación Noroeste has completed its acquisition of Cementos Balboa. The companies agreed to the deal in June 2021. Agencia EFE News has reported that the acquisition brings parent company Votorantim Cimentos’ installed cement capacity to 57.4Mt/yr globally.

Chile: Unacem has completed its acquisition of Spain-based Cementos La Unión’s Chilean cement business. The value of the asset, including assumed debts, was US$23m. The business consists of the 0.3t/yr San Antonio grinding plant and two ready-mix concrete plants with a total capacity of 336,000m² /yr.

There have been a couple of news stories worth noting in the Turkish market this week. First, it was revealed that Medcem had chosen Sintek Group to build a new production line at its integrated plant in Mersin. Second, Çimko Çimento agreed to buy two integrated plants and a grinding plant from Çimsa.

The Medcem upgrade project will see the subsidiary of Eren Holding add a second production line, with a clinker capacity of 9000t/day. Sintek Group reportedly has agreed to do this for US$128m. This follows an announcement from Medcem in late May 2021 that it was intending to invest over US$200m towards increasing its plant’s overall production capacity to 6.5Mt/yr from 3.5Mt/yr. The plan at this point was to start construction work in August 2021 with eventual commissioning of the second line in the first quarter of 2023. In addition the cement producer said at the time that it was going to open a new terminal in the US shortly. This was intended to join the company’s existing grinding plants in Cameroon and Tunisia and terminals in Russia and Northern Cyprus. On a side note, Medcem likes to point out that the 11,500t/day clinker production capacity on its existing line at its plant is the biggest in Turkey and Europe.

The Çimko Çimento deal with Çimsa was for US$127m. It includes the Nigde Kayseri integrated plants, the Ankara grinding plant and seven ready-mix concrete plants. As would be expected, the transaction is subject to the approval of the local competition authority.

Graph 1: Domestic and export cement sales in Turkey, January – June 2017 – 2021. Source: Türk Çimento.

Graph 1 above gives an idea why some cement producers might have decided that it’s time to expand either through upgrades or acquisitions. The general Turkish economy suffered a jolt in mid-2018 when the value of the Turkish Lira dropped and interest rates rose. The coronavirus pandemic hit in 2020 but after a slowdown at the start of that year the economy managed to grow. The growth has continued so far in 2021 but inflation rates have also soared. In the cement sector, annual domestic sales fell consecutively from 2017 to 2019. They started to recover in 2020 and so far in 2021 it looks like they are continuing to grow. As domestic sales fell the sector focused on exports and they have grown steadily on an annual and half-year basis since 2018. Annual exports hit a high of 16Mt in 2020 or 23% of total sales.

Despite this, in June 2021 the Turkish Cement Manufacturers' Association, Türk Çimento, was warning that input costs were mounting, particularly in the last year. It reported that the price of petcoke had nearly tripled in this period. It also warned of mounting production overcapacity, estimated at over 20Mt/yr in 2019 although down to 7Mt/yr in 2020. Coupled with a fall in annual domestic sales from 2017 to 2019, in its words, “The contraction in domestic consumption during that period steered our companies toward exports.” Some of the larger cement producers, including Oyak, Akçansa and Çimsa all reported healthy rises year-on-year in revenue and operating profit in the first half of 2021. They also reported mounting costs which have risen by 35 – 80%.

The other recent stories from Turkey to note are a two week strike organised by the Building Contractors Confederation (IMKON) in September 2021 due to high costs, particularly cement. The confederation claimed that the price of cement had tripled over the last year. Earlier, in late April 2021, the Turkish competition authority Rekabat Kurumu launched a probe into alleged collusion by nine cement producers including Oyak, Çimsa and Limak. We are not saying these two stories are connected. The current state of the Turkish economy is more than enough to cause input costs for cement producers to spike. Yet headlines like this cannot be reassuring to builders wondering why the cost of cement is going up.

In summary, it’s an uncertain time for the Turkish cement industry. Sales are recovering but this has been achieved by pushing exports more than a rally at home. Alongside this, currency instability and high inflation rates are raising costs for cement producers and end-users. This hasn’t been enough though to stop growth activity from a couple of producers in the last week.

For more on the Turkish cement sector read ‘Cement in Turkey’ in the October 2021 issue of Global Cement Magazine

Australia: AdBri and Barro Group have signed an agreement to acquire Metro Quarry Group’s sand operations. The business consists oftwo quarries, the Lang Lang quarry and the Nyora quarry, in Victoria. The quarries command a total of 50Mt of sand reserves. AdBri will pay US$21.6m to the companies’ joint venture for the purpose of the acquisition and to supplement the business’ working capital. The partners expect to conclude the deal in November 2021.

US: Martin Marietta Materials has completed its US$2.3bn takeover of Lehigh Hanson’s West Region business. The acquisition enlarges the company’s cement assets by two new plants and related distribution terminals, as well as targeted downstream operations, in California and Arizona.

Chair, president and CEO Ward Nye said "We are pleased to complete the Lehigh West Region acquisition and welcome a talented group of new employees to the Martin Marietta team. These assets serve as a new growth platform for our continued geographic expansion and are uniquely positioned to benefit from favourable market dynamics and accelerating public and private construction activity in California and Arizona.” He added “We are confident in our ability to quickly realise the benefits of this transaction and deliver significant value creation for our shareholders, customers and employees following the same proven approach we took with our acquisitions of TXI and Bluegrass."

France: France-based Saint-Gobain has acquired Chryso from financier Cinven for Euro1.02bn. The Le Moniteur newspaper has reported that the group will operationally integrate Chryso into its high performance solutions division. It said that it intends to develop Chryso in markets already served by Saint-Gobain, and to accelerate cross-selling between Weber and Chryso.

CEO Benoit Bazin said "Chryso strengthens us significantly in the growing construction chemicals market, in which we have made 10 acquisitions and opened 16 plants in 18 countries over the past three years to now exceed more than Euro3bn in turnover in 66 countries.”

Brazil: CSN Cimentos is reviewing alternative options to raise funds to pay for its acquisition of LafargeHolcim Brasil’s cement assets after cancelling its planned initial public offering (IPO). The O Estado de São Paulo newspaper has reported that the producer abandoned the planned IPO of US$500m – US$1bn-worth of shares due to stock market turbulence. The value of the deal was US$4bn.

Turkey: Sanko Holding subsidiary Çimko Çimento has agreed to acquire several assets from Sabanci Holding subsidiary Çimsafor US$127m. The Dünya newspaper has reported that the deal covers two cement plants – the Nigde plant and Kayseri plant – the Ankara grinding plant and seven ready-mix concrete plants.

Germany: HeidelbergCement has invested in a 45% stake in Thoma Bravo’s supply chain software subsidiary Command Alkon. The group says that the companies’ collaboration can help advance heavy building materials supply chains’ digital transformation. It said that this will entail more transparent industry standards for seamless connectivity, improved solutions to customers’ everyday pain points, an increased pace in innovation and an acceleration of sustainability efforts. HeidelbergCement will continue to autonomously operate its proprietary digital product suite HConnect.

Chair Dominik von Achten said “As part of our Beyond 2020strategy, our clear goal is to become the first industrial tech company in our sector.” He added “We have made significant progress in our independently developed HConnect digital customer experience since its development in 2018. The investment in Command Alkon and the partnership with Thoma Bravo now allows us to monetise the hidden potential of our assets and translate it into a new growth path for HeidelbergCement. Together, we will build the digital ecosystem of the future for the heavy building materials industry.”