Displaying items by tag: Divestments
Philippine Competition Commission to keep review of Holcim Philippines divestment separate from competition probe
12 July 2019Philippines: The Philippine Competition Commission says that its investigation on alleged violations of competitive practice by the cement industry will be kept separate from a review of the acquisition of Holcim Philippines by San Miguel Corporation. The commission made the statement in a reply to questions raised by consumer group Laban ng Konsyumer, according to the Manila Bulletin newspaper. However, the commission’s Mergers and Acquisitions Office said that, although both cases are being considered independently, this would not preclude them from considering the pre-merger activities of the companies.
Ethiopia: The Endowment Fund for the Rehabilitation of Tigray (EFFORT) plans to sell its shares in Messebo Cement. The shares will go on sale at the International Tigray Diaspora festival later in July 2019, according to Fana Broadcasting. EFFORT is also selling its shares in SUR Construction and Trans Ethiopia.
Turkey: Batıçim Çimento, part of Bati Anadolu Group, is considering selling up to a 75% stake in its subsidiary Batısöke Çimento. A source quoted by Reuters says that financial services group Unlu&Co has been hired to handle the sale. A document seen by Reuters indicates that due diligence for any potential offers is scheduled to be completed by September 2019. Batisöke Çimento operates one integrated and one grinding plant in Turkey.
In 2018 Turkish conglomerate Sabancı Group mandated Unlu&Co to sell cement producers Kayseri Çimento, Nigde Çimento and Ladik Çimento.
ARM Cement sells assets for US$50m
21 May 2019Kenya: ARM Cement has signed a deal to sell its business in Kenya to the National Cement Company for US$50m. The transaction is subject to customary regulatory approvals, according to the Business Standard newspaper. ARM Cement also has operations in Tanzania, Rwanda and some interests, in the form of unexploited mineral deposits, in South Africa.
“This transaction is in line with National Cement’s growth strategy in Kenya to position itself as the leading cement manufacturer in the region. The industry is poised for growth and we are excited about the prospects for this next chapter of our business. We will endeavor to safeguard the interests of all stakeholders including the employees, customers, and suppliers in the overall interest of Kenya,” said Narendra Raval, chairman of National Cement.
The cement producer was placed under administration in August 2018. In late 2018 Oman’s Raysut Cement said it planned to buy ARM Cement as part of its expansion plans. Nigeria’s Dangote Cement was also linked to a potential purchase of the company.
Malaysia: LafargeHolcim has completed the divestment of its activities in Malaysia with the disposal of its entire 51% shareholding in Lafarge Malaysia to YTL Cement for around Euro872m. The group says that the transaction will reduce its net financial debt by close to Euro530m. Together with the divestment of its activities in Indonesia, Singapore and the Philippines, this transaction is expected to ‘significantly’ reduce the company’s net debt to recurring earnings before interest, taxation, depreciation and amortisation (EBITDA) ratio.
Philippines: The Department of Trade and Industry (DTI) expects San Miguel Corporation’s acquisition of a majority stake in Holcim Philippines to reduce the price of locally produced cement. Trade Secretary Ramon M Lopez said that he expected operational synergies and economies of scale to ‘hopefully’ bring down prices, according to the BusinessWorld newspaper. He also noted that import duties on imports of cement could also provide a ‘healthy competitive environment.’
San Miguel Corporation agreed to purchase LafargeHolcim’s 85.7% share in Holcim Philippines in early May 2019. The deal is expected to be completed by the end of 2019.
Jenisch ejects LafargeHolcim from Southeast Asia
15 May 2019Jan Jenisch and the team at LafargeHolcim only went and bloody did it! Apologies for readers not wanting yet more column inches on LafargeHolcim but when the world’s largest cement producer leaves an entire sub-continental market it deserves mention.
First Indonesia, then Malaysia and now the Philippines. LafargeHolcim will soon no longer produce clinker in Southeast Asia. That’s a region with 651 million inhabitants or around 8% of the world’s total population. All of those people need cement and other building products as their nations build houses, infrastructure and so on. And LafargeHolcim is no longer there.
The reason, of course, is local production overcapacity in many of these countries and rampageous importers pulling in cheaper product from elsewhere. The Association of Southeast Asian Nations (ASEAN) includes Thailand and Vietnam, two of the world’s largest cement exporters. The region also borders China, the place which could produce 40% of the world’s cement if it so wanted. So, understandably, LafargeHolcim pulled the plug. Note that the recent divestments in the region didn’t include its seabourne trading wing, LafargeHolcim Trading. Oh no! Clearly, if you can’t beat them, you join them instead.
So, what to say about the Philippines sale? Unlike the divestments in Indonesia, this sale has valued the production base more highly. LafargeHolcim’s integrated production capacity, including the upgrade at its Bulacan plant, is being sold for over US$175/t with the partial share factored in. And that’s not even including the grinding plant at Mabini. The sale in Indonesia was US$120/t or lower. The Duterte administration’s infrastructure drive (Build, Build, Build) and muscular government action on imports have doubtless played their part here. Yet still LafargeHolcim sold. In the words of chief executive officer (CEO) Jan Jenisch the area was ‘hyper competitive.’
Back home at the group’s headquarters in Switzerland, the potential revenue of over US$4bn from the three ASEAN divestment is poised to trickle onto the balance sheets for 2019. If it were all to go towards debt reduction then these proceeds could pile drive the group’s net financial debt to below Euro10bn. This would be good place to be if the on-going Chinese-US trade tiffs became a little hotter, say, or in the case of a fresh banking crisis. Alternatively the group could pick a new region for development and start all over again or focus on diversifying its business along the building materials chain. And let’s not forget the potential legal bill from the on-going investigation into Lafarge Syria’s conduct during the Syrian civil war.
Throughout this whole exercise, from the outside looking in at LafargeHolcim’s actions, the thought has persistently been: what do they know that everyone else doesn’t? The answer, it may turn out to be, nothing. Yet, rightly or wrongly, we’re marvelling at the bravado of it all.
Cemex agrees final agreement to sell aggregate and ready-mixed concrete assets in Germany
14 May 2019Germany: Cemex has signed the final agreement to sell its aggregates and ready-mix assets in the North and North-West regions of Germany to GP Günter Papenburg AG for around Euro87m. The divestment is expected to close during the second quarter of 2019.
The assets in Germany being divested consist of four aggregates quarries and four ready-mix facilities in North Germany, and nine aggregates quarries and 14 ready-mix facilities in North-West Germany. The proceeds expected to be obtained from this divestment will be used mainly for debt reduction and for general corporate purposes.
India/China/UAE: UltraTech Cement is looking for buyers for the cement production assets of Binani Cement in China and the UAE. It purchased Binani Cement’s share in joint-ventures in these countries, according to the Hindu newspaper. In China it runs a 3Mt/yr integrated plant and in the UAE it operates a 2.5Mt/yr grinding plant. However, before it was acquired by UltraTech Cement, Binani Cement was unable to sell its stake in its Chinese unit. Attempts to sell the plant in UAE are also expected to be difficult due to market overcapacity.
Malaysia/Singapore: Switzerland’s LafargeHolcim has signed a deal to sell its 51% stake in Lafarge Malaysia to YTL Cement for US$396m. Lafarge Malaysia operates three integrated cement and two grinding plants. With the divestment, LafargeHolcim will fully exit the Malaysian market. LafargeHolcim has also signed an agreement with YTL Cement Singapore for the divestment of its entire 91% share in Holcim Singapore.
YTL Cement is part of YTL Corporation, a Malaysian infrastructure conglomerate, which is active in cement production, construction, property development and utilities. The deal is expected to be completed within the second quarter of 2019. It is subject to approval by regulatory bodies.