Displaying items by tag: Acquisition

India/China: Sinoma International Engineering (Hong Kong) Co Ltd, part of the National Materials Group (Sinoma), has entered the Indian cement equipment production industry with the acquisition of a major stake in LNV Technology Pvt Ltd, based in Chennai, India for US$23.9m.

According to the agreement, Sinoma International Engineering now has a 68% share in LNV Technology, which has become a member of the Sinoma Group. The earlier joint venture partners V C Rao, managing director of the company and LV Technology Public Co Ltd, retain around 16% equity each. 

Liu Zhijiang, group chairman of Sinoma said that the Chinese firm would bring in its expertise in research and development, design, manufacturing, installation and after sales service to the Indian joint venture. With the venture, LNV Technology expects to be the leading supplier of cement equipment in India in the next five years.

Rao said that LNV Technology would look at setting up engineering, procurement and construction (EPC) capabilities, which are not prevalent in the Indian cement equipment industry. "Sinoma is the only company in the world to do this kind of EPC in the segment. That model is not available in India now, which will be brought in through LNV Technology," he said.

Globally 80% of the cement equipment market is cornered by just four companies: Sinoma International, FLSmidth, Polysius AG and KHD.

China: China Sinoma International Engineering will increase its capital expenditure by 29% to US$1.81bn some of which may be spent on acquiring European companies.

The Chinese state-owned cement equipment manufacturer and cement producer has set aside US$80.5m to acquire mostly foreign cement equipment companies, said chief financial officer Yu Kaijun as reported by the South China Morning Post. "We are in talks to acquire some European cement equipment companies, including German ones."

In the cement equipment sector, Sinoma International would explore opportunities in Africa, the Middle East and Southeast Asia, said Sinoma chairman Liu Zhijiang. "It will secure its footing in long-term strategic markets, including Russia and South America and enhance its influence in India," he said.

In 2013 Sinoma International aims to secure more than US$4.83bn of orders for cement equipment with about two-thirds of these originating from outside of China. So far Sinoma International has secured US$1.61bn of orders since January 2013, mostly from abroad. Sinoma will also invest US$956m in expanding cement production capacity in China, a decrease from the US$1.13bn it spent in 2012.

Germany: German cement industry supplier Loesche GmbH has acquired the majority of stakes in the aixprocess and aixergee engineering companies based in Aachen, Germany.

aixprocess GmbH develops models and tools for the simulation of complex process and flow-relevant processes and has been providing solutions successfully to customers from the power plant and process engineering sectors for more than 10 years. It has earned its reputation internationally by providing modelling and computation technologies, especially in the area of reactive multi-phase flows.

aixergee GmbH is specialised in the optimisation of production processes in the cement industry and established internationally in the areas of alternative fuel firing, performance improvement, emissions reduction and stabilisation of plant operation. It combines industry-specific knowledge with numerical computation methods customised to meet the requirements of the cement industry in its optimisation concepts.

"Through the incorporation into Loesche Group, a globally well-positioned organisation, we can even better ensure the successful support of our international clientèle," explains Matthias Mersmann who, as Corporate Manager of Technology of Loesche Group, will continue to act as Managing Director of aixergee GmbH.

"We do not intend to act as a single source supplier for every project; however, we would like to offer the best solutions for the challenging tasks of our customers. We are therefore extremely pleased to have been able to ncorporate aixprocess and aixergee, two sector leading companies, into our group. In this way we continue to strengthen our position as a competent partner for the cement, power plant, and natural resource industries," said Dr Thomas Loesche, Managing Partner of Loesche GmbH.

Ireland/UK: The Irish Times has reported that a rifle bullet was sent to the chief executive of the Ireland-based Lagan Group, Kevin Lagan, during the third week of January 2013 in what is thought to be a direct threat linked to Lagan's proposed merger with part of the Quinn Group, which is based in Northern Ireland in the UK.

The rifle bullet was contained within a cigar box, which had, 'Quinn...is this what you want?' written on it. It had apparently been sent from Northern Ireland.

Lagan said he was 'totally amazed' by the package. He said the group's proposed merger with Quinn Building Products posed no threat to jobs. "In fact it secures the future of both Quinn and ourselves going forward," he said. "This is clearly an attempt to intimidate myself and the Lagan Group at a time when we are engaged in discussions with Quinn on combining our cement and building products businesses."

Lagan said that the person or persons behind the 'crude intimidatory tactic' were obviously not interested in protecting jobs. "We will not be swayed from our determination to complete our discussions successfully," he added.

Seán Quinn lost control of the Quinn Group in April 2011 when a receiver was appointed by the former Anglo Irish Bank. There have since been a number of incidents believed to have been carried out by people angry about what has happened.

China: Huaxin Cement, a Shanghai-listed cement manufacturer, has plans to acquire a 70% stake in two separate cement companies located in Hubei Province at a combined price of US$83m, according to sources reported by China Business Newswire. Huaxin Cement said that the acquisition will increase its competitiveness in the local cement market.

Turkey: Hacı Ömer Sabancı Holding is discussing potential takeovers with several cement producers in countries near Turkey, according to reports from Bloomberg quoting the Turkish industrial group's president, Mehmet Gocmen. The planned acquisitions are part of the group's goal to double its capacity or at least increase it above 20Mt by the end of 2017. According to Gocmen, Sabancı has the financial strength to buy more than one company at a time.

At present, Sabancı has as much as 13Mt of combined cement production capacity at Çimsa Çimento Sanayi & Ticaret which it owns, and Akçansa Çimento the industrial holding's joint venture with HeidelbergCement. Akçansa and Çimsa seek growth through deals both in Turkey and abroad as Turkish regulations do not allow a single company to hold a slice larger than 25% of the domestic market.

Ireland: CRH chief executive Myles Lee has confirmed that the building materials group is interested in expanding its presence in India. The comment follows rumours from the Indian media that CRH and Holcim are both in separate talks with the Shriram Group to buy a stake in Sree Jayajothi Cements (SJJCL).

Lee said that CRH remained interested in expanding its presence in India, but declined to comment on Sree Jayajothi. CRH 'terminated' negotiations with Jaypee Cement Corporation in October 2012 because the parties were unable to agree terms.

"We have been on the lookout for a partner for quite some time and we keep having several discussions with different players both strategic and financial," said T Shivaraman, managing director and chief executive of Shriram Engineering and Procurement Company, which owns SJJCL. He refused to comment on the involvement of either CRH or Holcim. It has been reported that private equity giants Blackstone and KKR are also in separate preliminary talks with Shriram about its stake in the cement manufacturer. SJJCL owns a cement plant with a production capacity of 3.2Mt/yr based in Andhra Pradesh.

The rumours arrived at the same time that CRH announced it had made acquisitions and investments valued at Euro630m in 2012. The bulk of the money was spent in the US, where Euro256m was spent in the second half of the year. In Europe CRH spent Euro119m in the second half of 2012 in acquisitions in Finland and the UK. Lee confirmed that CRH holds between Euro1bn and Euro1.5bn to spend on deals.

Both CRH and Holcim have a combined capacity of around 61Mt/yr in India. Holcim controls ACC and Ambuja Cements while CRH has a venture with Hyderabad-based My Home Industries, which owns a 4.2Mt/yr plant.

China: China Resources Cement (CRC) has announced that it has agreed to acquire a 100% equity stake in Hainan Wuzhishan Dajiangnan Cement Limited at a total of US$8.4m. Hainan Wuzhishan Dajiangnan operates a 0.6Mt/yr cement grinding line in Maoyang Town, Wuzhishan City, Hainan Province.

CRC says that the acquisition will expand the strategic locations of its business and strengthen its market position in Hainan Province.

Rwanda/South Africa: The major South African cement producer PPC (Pretoria Portland Cement) has purchased a 51% stake in the Rwandan firm Cimerwa for US$69.4m in cash. The deal is in line with PPC's vision of making 50% of its revenue outside South Africa itself in the coming years. The deal comes after a similar deal between PPC and Ethiopia's Habesha Cement, of which it has bought a 27% stake.

"This transaction is a further step in our commitment to invest in sub-Saharan Africa and we are very confident about Rwanda," said PPC's CEO Paul Stuiver. "The Cimerwa plant is located in a challenging but very strategic region in East Africa, which currently lacks significant cement production capacity."

Cimerwa, in south-west Rwanda, has been the only cement producer in the country for 28 years. It has the capacity to make 0.1Mt/yr of cement but is currently undergoing a 0.6Mt/yr expansion project that is due to be commissioned in 2014.

Cement demand in Rwanda is estimated at 0.35Mt/yr but, based on the region's positive economic outlook, regional cement demand is projected to increase to 1Mt/yr in the next decade. "Combined with our recent investment in Ethiopia, the Cimerwa transaction will increase PPC's revenue outside of South Africa to more than 30% by 2015-16," added Stuiver.

"Rwanda looks like an attractive market to build capacity, with robust gross domestic product growth expectations, a large supply deficit in the cement market and challenging logistics for importing cement," said Ross Heyns, an equity analyst at Kagiso Asset Management. However, Heyns said that it appeared that PPC had paid a fairly hefty price for the asset. "After raising the additional US$104m of debt and expanding the plant's capacity to 0.7Mt/yr, the US$69.4m that they are paying for 51% of Cimerwa implies a total valuation for the business (including debt) of US$400/t of cement capacity," he said.

PPC's desire to expand to more locations outside of South Africa is in part due to the current overcapacity in that market. The country has a capacity of 16Mt/yr but is only likely to produce 11Mt in 2012. This overcapacity will not be helped when the 2.6Mt/yr Sephaku Cement plant, backed by Nigeria's Dangote Group, comes online in 2013.

India: The talks between Jaypee Group and Aditya Birla Group regarding the sale of the former's Gujarat based cement units have finally moved to the final stages, according to local media. It was reported that valuations of the deal, which had already resulted in failed acquisition attempts by others, have continued to cause delays.

Birla has been negotiating the cost of Jaypee's Gujarat cement units with the aim of paying a total of US$800m. The reports say that Birla had offered to purchase the units at US$160/t of installed capacity. This is significantly lower than the US$200/t paid during deals between Holcim and ACC.