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Displaying items by tag: Belgium
Belgium: HeidelbergCement has completed the sale of its operations in Belgium, primarily consisting of Italcementi’s subsidiary Compagnie des Ciments Belges (CCB) to an affiliate of Cementir Holding. The European Commission has approved the agreement.
“With the disposal of the Belgium assets we fulfill the obligation of the European Commission and improve the net financial position of HeidelbergCement after the acquisition of Italcementi,” said Bernd Scheifele, CEO of HeidelbergCement.
HeidelbergCement and Cementir Holding announced the sale on 25 July 2016. The transaction has an enterprise value of Euro312m on a cash and debt-free basis.
Belgium: Data from the Cement Sustainability Initiative (CSI) suggests that the carbon intensity of European Union (EU) cement increased from 2008 to 2014, according to analysis by the environmental campaign group Sandbag. It adds that the sector made greater strides in reducing emissions in the years prior to the EU Emissions Trading System (ETS). Since 2011, the EU cement sector has increased exports of cement clinker outside the EU, demonstrating that the EU ETS has not made the sector globally uncompetitive.
“EU policymakers have overprotected the cement sector in the EU ETS to such an extent that companies have not taken any action to reduce their greenhouse gas emissions. The EU’s approach is killing with kindness; by maintaining the status quo on free allocation of allowances they are making their own climate targets undeliverable,” said Wilf Lytton, analyst at Sandbag.
Sandbag say that this highlights the inability of the EU’s climate policy, as currently designed, to address European cement sector emissions. Meanwhile, low-carbon new entrant cement companies operating outside of the EU ETS have commercialised technologies to dramatically reduce the carbon footprint of cement, yet are struggling to scale-up as they fight through a mass of regulation and product standards that support the high-carbon status quo.
Research by Sandbag revealed in March 2016 that incentives in the design of the EU ETS have driven higher greenhouse gas emissions emissions in the cement sector.
Cementir quietly grows its business
27 July 2016And the winner of the Italcementi assets in Belgium is… Cementir. The Italian multinational cement producer picked up Compagnie des Ciments Belges for Euro312m this week. The deal included all of Italcementi's cement, ready-mix and aggregates assets in Belgium, Italcementi's stake in an existing limestone joint-venture with LafargeHolcim and a portion of HeidelbergCement's limestone quarry in Antoing. It was offered by HeidelbergCement to the European Commission to ensure approval of its acquisition of Italcementi.
The assets from Compagnie des Ciments Belges comprise one 2.5Mt/yr integrated cement plant, three terminals and 10 ready-mix concrete plants. As ever, the add-ons confuse the final price but the deal values the cement production capacity at Euro125/t or US$138/t. This figures seems low compared to the other big sale this week of Holcim Lanka to Siam City Cement. There, the Thai producer picked up an integrated cement plant and a grinding plant with a combined cement production capacity of 1.6Mt/yr for US$400m. That values the cement production capacity at US$250/t.
Increasing its presence in western Europe makes a lot of sense for Cementir. It’s one of the smaller European multinational cement producers with 14 cement plants, often white cement producers, in Italy, Turkey, Denmark, Egypt, the US, China and Malaysia. Altogether this comes to 15.1Mt/yr in cement production capacity. In its press release, Cementir described Gaurain-Ramecroix, the cement plant it is buying, as the largest integrated cement plant in France-Benelux, region with ‘state-of-the-art’ technology and long-life mineral reserves.
Italcementi reported a 2.9% year-on-year fall in cement and clinker sales volumes in Belgium in 2015, noting a general reduction in cement consumption in all areas of the construction industry. The mineral reserves were confirmed at least as environmental clearance as granted and work began at the new Barry quarry at Gaurain-Ramecroix.
Cementir has rebuilt its revenue since hitting a high of Euro1.15bn in 2007 although it dipped again in 2014. Despite this ordinary portland and white cement sales volumes have been slowly falling from a high of 10.5Mt in 2011 to 9.37Mt in 2015. That said though its businesses in Scandinavia generated just under half of its operating revenue in 2015. So far in 2016, total group revenue rose by 2.8% to Euro210m in the first quarter of the year, with a fair portion of that attributable to Scandinavia. Bolting on a cement and concrete business in (relatively) nearby Belgium makes sense in this context provided the construction market eventually rallies.
Yet, another on-going Cementir acquisition back home in Italy may make the company reflect on the risks of buying assets in Belgium. Cementir is drawing closer to purchasing the cement and concrete arm of Sacci as it plans to pick up five cement plants and assorted ready-mix concrete assets for the bargain price of Euro125m, following a protracted bankruptcy. Cementir may remember that Lafarge sold some of these assets to Sacci for Euro290m in 2008 before the situation deteriorated. The top brass at Cementir must be praying that the Sacci’s fate doesn’t await them in Belgium.
Cementir Holding buys Compagnie des Ciments Belges
25 July 2016Belgium: HeidelbergCement, through its subsidiary Ciments Français, has agreed to sell its operations in Belgium, primarily consisting of Italcementi’s Belgian subsidiary Compagnie des Ciments Belges (CCB), to Aalborg Portland Holding, a subsidiary indirectly 100% controlled by Cementir Holding. The transaction has been valued at Euro312m on a cash and debt-free basis. The transaction is expected to close in the second half of 2016.
“With the disposal of the Belgium assets we fulfil the obligation of the European Commission and improve the net financial position of HeidelbergCement after the acquisition of the 45% share in Italcementi,” said Bernd Scheifele, Chairman of the Managing Board of HeidelbergCement. “We are well on track to reach our target of at least Euro1bn of proceeds from disposals.”
The divestment of operations in Belgium was offered to the European Commission in order to address competition concerns caused by the group’s acquisition of Italcementi. The sale to Cementir Holding is subject to the approval of the European Commission.
Belgium/US: HeidelbergCement has made a shortlist of potential bidders for assets in Belgium and the US that should be divested as part of its acquisition of Italcementi, according to Bloomberg. Bidders for Italcementi’s Belgian business include Turkey’s Çimsa Çimento and Italy’s Cementir Holding. The business are valued at around US$400m. Bidders for Italcementi’s US assets include Summit Materials and CRH. This business are valued at around US$600m according to sources quoted by Bloomberg. All shortlisted bidders will face a due diligence process.
Belgium: European cement production grew by 0.9% year-on-year to 248Mt in 2015, according to newly published data in the 2015 Activity Report from the European Cement Association (CEMBUREAU).
Individual European countries recorded a mixed performance. Cement production in Spain grew by 3.3% in 2015. However, in Italy production fell by 3.4% and in France it fell by 5%. CEMBUREAU reported strong performance from its members in Eastern Europe, notably in the Czech Republic, Hungary and Romania. In the European Union (EU28) the association reported a 3.7% increase in cement production to 172Mt fro 165.8Mt. However, CEMBUREAU reinforced the face that EU28 cement production remains 37.7% below the production levels recorded in 2007.
CEMBUREAU data uses estimates for some countries where the data is unavailable including Germany, the UK and Poland. The association represents the national cement industry associations and cement companies of the European Union with the exception of Cyprus, Malta and Slovakia plus Norway, Switzerland and Turkey. Croatia and Serbia are associate members of the organisation.
Europe: The European Commission (EC) has cleared the acquisition of Italcementi by HeidelbergCement under the condition that HeidelbergCement sell Italcementi's entire business in Belgium. The EC expressed concern that the merged companies would have owned more than 50% of the market share in the country.
The EC accepted that the two companies’ businesses were largely complimentary in Europe. HeidelbergCement is active in Northern, Western and Central Europe whereas Italcementi focuses on Southern Europe, operating cement facilities in Italy, France, Spain and Greece. Italcementi is also active in Belgium and Bulgaria. However, it noted that the companies’ Ordinary Portland Cement activities overlapped substantially in in Belgium and to a lesser extent in Southern Italy. It also pointed out that there are cross-border overlaps between their grey cement activities in Germany and France and in Bulgaria and Romania. The merging parties' activities in aggregates and ready-mix concrete mainly overlap in Belgium and Northern Spain whereas their white cement activities overlap primarily in Belgium, France and Austria.
HeidelbergCement has offered to sell Italcementi’s Belgian subsidiary Compagnie des Ciments Belges (CCB). The divestment includes: all of Italcementi's cement, ready-mix and aggregates assets in Belgium; Italcementi's stake in an existing limestone joint venture with LafargeHolcim; a portion of HeidelbergCement's limestone quarry in Antoing provided in exchange for a portion of Italcementi's Barry quarry, which will be retained by HeidelbergCement.
“We are very pleased with the positive decision of the European Commission,” says Bernd Scheifele, chairman of the managing board of HeidelbergCement. “This decision is an important milestone on our way to the full acquisition of Italcementi.” HeidelbergCement. Is still awaiting the decision of the US regulator the Federal Trade Commission for approval in that territory.
Belgium: FEBELCEM, the federation of cement producers in Belgium, has reported that cement consumption rose by 4.6% year-on-year to 6.4Mt in 2015. It attributed the growth to favourable weather and growth in residential construction. It expressed concern that imports of cement also rose in 2015 by 18% to 1.51Mt from 1.28Mt. This increased the market share of imports to 23.6%.
Update on HeidelbergCement acquisition of Italcementi
13 April 2016HeidelbergCement released more detail on its plans to buy Italcementi last week. The main points were that Italcementi’s operations in Belgium will be sold, the Italcementi brand will be retained, its research and development (R&D) centre will assume responsibilities for the entire group and up to 260 job losses are expected in Bergamo. The integration plan is expected to be complete by 2020.
Following an update in HeidelbergCement’s preliminary financial results for 2015 in February 2016, this was more focused on the practicalities of taking over a company. Sales of assets in Belgium were expected from the moment the deal was announced in July 2015. Between them the two companies operate three of the country’s four cement plants, holding 73% of the market by cement production capacity. Selling up Italcementi’s Belgian subsidiary Compagnie des Ciments Belges will maintain the existing market balance. Once this is done, from a cement sector perspective, interaction from the European Commission on the deal should merely be a formality.
Interestingly, no plans to sell assets in the US were announced. This is more ambitious on HeidelbergCement’s part because the acquisition has far bigger implications in that country. Merging Italcementi’s Essroc subsidiary and HeidelbergCement’s Lehigh Hanson subsidiary will see HeidelbergCement become the new second largest cement producer in the US with around 16.4Mt/yr. LafargeHolcim had a relatively easy ride from the Federal Trade Commission (FTC) having to sell two integrated cement plants, two slag grinding plants and a series of terminals. As HeidelbergCement will become the second largest cement producer it seems unlikely that the FTC will be too demanding. However, post-acquisition the cement producer will own cement plants within 75 miles of each other in Pennsylvania and in Maryland and West Virginia. The FTC may take exception to this but perhaps HeidelbergCement is trying their luck to see if it can get away with it.
The decision to retain Italcementi’s i.Lab R&D centre in Bergamo, Italy raises questions about what will happen to the Heidelberg Technology Centre (HTC) in Leimen, Germany. The focus here is on making Bergamo the ‘product’ R&D division for the entire group. i.Lab was opened in early 2012 to fanfare, based in a building designed by architect Richard Meier and it cost Euro40m to build. How this fits with HeidelbergCement’s existing Global R&D team at the HTC remains to be seen.
Job losses of up to 260 personnel at Bergamo are regrettable but hardly unexpected. It may not be much comfort for any staff members facing redundancy but this figure is well below the figures bandied about in the media in late 2015 of first around 1000 and then nearer 500. Another 170 personnel will also be offered relocation packages taking the impact of the reorganisation up to about 400 of Italcementi’s 2500 workforce in Italy.
Looking at the wider situation with the acquisition this week, HeidelbergCement announced a record contract for Norcem, its Norwegian subsidiary, to supply 280,000t of cement over three years for an infrastructure project. Then, Carlo Pesenti, the chief executive officer of Italcementi, was reported making comments about the business’ expansion plans in Thailand and the Association of Southeast Asian Nations (ASEAN). Projects in Myanmar and Cambodia look likely once the acquisition is complete. Finally, the ratings agency Moody’s was drumming up attention for a market report by pointing out the implications for the multinational cement producers in India if a proposed rise in infrastructure spending gets approved. In summary HeidelbergCement and Italcementi are unlikely to benefit due to their southern Indian spread of assets and local production overcapacity.
HeidelbergCement may not be getting it all its own way but the acquisition of Italcementi remains on track so far. All eyes will be on how the US FTC responds to the deal.
Germany/Italy: HeidelbergCement has released details on how it will integrate Italcementi into its business. Key details of the plan include the sale of Italcementi’s Belgium operations, the retention of the Italcementi brand and headquarters and the Italian cement producer’s i.Lab centre will assume research and development responsibilities for the entire group. However the acquisition is expected to result in up to 260 job losses at Italcementi’s base in Bergamo. The full integration plan is expected to be complete by 2020.
“Following our motto ‘all business is local’, it is important for us to preserve Italcementi's strengths and professional expertise, which have ensured its success in Italy and abroad. I am convinced that we will be able to achieve the planned Euro400m in synergies and bring Italcementi back to profits by operational improvements, streamlining the administration and leveraging the increased size of our combined business,” said Bernd Scheifele, chairman of the managing board of HeidelbergCement.
The acquisition still depends on approval from the European Commission and the Federal Trade Commission. On 1 April 2016, HeidelbergCement formally submitted the merger plan to the European Commission.
To this end, HeidelbergCement has decided to sell Italcementi’s entire Belgian operations, primarily consisting of Italcementi’s Belgian subsidiary Compagnie des Ciments Belges. The proposed divestment would remove all overlaps between the activities of HeidelbergCement and Italcementi in Belgium and the Netherlands. Preparations forthe divestment have already started and ‘significant’ interest has been noted. BNP Paribas will support the process.
The plan presented in Bergamo by Scheifele says it intends to keep the industrial network and plants in Italy as well as the Italcementi brand. In addition, HeidelbergCement builds on Italian management heading the Group's operations in Italy. i.Lab, based in Bergamo, where Italcementi will keep the headquarter of Italian country organisation, will become the home of the product research and development division of the whole group.
In order to streamline the overall group organisation some staff and administrative functions will be centralised in Heidelberg. According to the integration plan around 170 people will receive relocation offers to other offices within the group. Any redundancies in Bergamo, which could potentially affect between 230 and 260 people, will be handled using Italy's temporary layoff scheme. In addition, severence packages will be negotiated with the unions. At the end of the transition period in 2020, about 210 to 250 professionals will remain in Bergamo.
HeidelbergCement expects the closing of the acquisition of the 45% stake to be finalised in early July 2016 depending on the decision of the cartel authorities in Europe and the USA. Implementation of the integration plan will start after the closing.