Displaying items by tag: Federal Trade Commission

US: The Federal Trade Commission (FTC) has approved an application from HeidelbergCement and Italcementi to sell the Essroc cement plant in Martinsburg, West Virginia, eight cement terminals in the mid-Atlantic region and related assets to Argos USA, a subsidiary of Cementos Argos. The divestiture was required by the FTC’s August 2016 final order settling charges that the US$4.2bn merger of HeidelbergCement and Italcementi would be likely to harm competition in five regional markets for cement in the US. The Commission vote to approve the divestiture was 3-0.

US: The Federal Trade Commission (FTC) is accepting public comments on an application from HeidelbergCement and Italcementi to sell the Essroc Martinsburg cement plant in West Virginia. The divestment is required by the FTC as part of the requirements of the acquisition of Italcementi and its subsidiary Essroc, by HeidlebergCement. The companies have sought permission from the FTC to sell the Martinsburg plant to the US division of Colombia’s Cementos Argos.

The Commission will decide whether to approve the proposed divestiture after expiration of a 30 -day public comment period. Public comments may be submitted until 24 October 2016.

US: HeidelbergCement, through its subsidiaries Essroc and Lehigh Hanson, has entered into a definitive agreement with Argos USA, a subsidiary of Cementos Argos, to sell its Martinsburg, West Virginia cement plant and eight related terminals. The disposal was required by the Federal Trade Commission (FTC) to address competition concerns arising from its acquisition of Italcementi. The agreement is subject to the approval of the FTC and other customary closing conditions. The transaction purchase price is US$660m on a cash and debt-free basis. HeidelbergCement expects the transaction to close in the fourth quarter of 2016.

“With the disposal of the Martinsburg plant we have successfully finalised our disposal programme in the context of the Italcementi acquisition,” said Bernd Scheifele, Chairman of the Managing Board of HeidelbergCement. “Together with the disposals of the non-core assets and the Belgium assets of Italcementi we have exceeded our Euro1bn target on disposal proceeds and thereby further improved the net financial position of HeidelbergCement.”

US: The Federal Trade Commission (FTC) has approved a final order settling charges, following a public comment period, that the proposed US$4.2bn merger of German cement producer HeidelbergCement and Italian producer Italcementi would likely be anticompetitive. Under the order, first announced in June 2016, the companies are required to divest to an FTC-approved buyer an Essroc cement plant and quarry in Martinsburg, West Virginia; seven Essroc terminals in Maryland, Virginia, and Pennsylvania; and a Lehigh terminal in Solvay, New York. At the buyer’s option, the order also requires the merged company to divest two additional Essroc terminals in Ohio.

The Federal Trade Commission (FTC) gave HeidelbergCement permission to complete its acquisition of Italcementi assets in the US on 17 June 2016. This was the second and final major competition body that could have challenged the purchase, following approval by the European Commission in late May 2016. Although the FTC consent now faces a month for comment the deal is looking likely to complete towards the end of the summer.

HeidelbergCement and Italcementi have gotten away with having to sell just one cement plant and 11 terminals in the US. The Lafarge-Holcim merger in 2015 had it tougher. Those companies were forced to sell two cement plants, two slag grinding plant and a host of terminals. Admittedly LafargeHolcim is now the biggest cement producer in the US (and the world) but HeidelbergCement will hold more integrated cement plants in the US following its acquisition.

As predicted the FTC took exception with the proximity of the company’s assets in West Virginia and Pennsylvania following the acquisition. So the parties have agreed to sell the Essroc Martinsburg integrated cement plant in West Virginia. When Global Cement visited the plant in late 2013 the staff told us that cement from the plant was distributed from central Ohio eastwards to western Pennsylvania and south to southern Virginia. The plant also switched over to a FLSmidth dry production line in 2010 giving it a clinker production capacity of 1.6Mt/yr, making it one of the newer plants in the Essroc stable.

The FTC also flagged up competition concerns in five metropolitan areas: Baltimore-Washington, DC; Richmond, Virginia; Virginia Beach-Norfolk-Newport News, Virginia; Syracuse, New York; and Indianapolis, Indiana. In light of this the proposed consent agreement requires the merged company to divest seven Essroc terminals in Maryland, Virginia and Pennsylvania and a Lehigh terminal in Solvay, New York. Two additional Essroc terminals in Columbus and Middlebranch, Ohio are to be sold at the option of the buyer and subject to FTC approval. Finally, Essroc’s terminal in Indianapolis is to be sold to Cemex.

Funnily enough, the FTC took about a year to approve both the merger of Lafarge and Holcim and HeidelbergCement’s purchase of Italcementi. This compares to the European Commission which took nine months to approve the Lafarge-Holcim deal but which took 11 months to clear the HeidelbergCement-Italcementi one. Given the greater overlap of assets of the Lafarge-Holcim merger in both Europe and the US one might have thought that the approval process would have taken longer. Or maybe bureaucracy moves at a speed all of its own. Read into this what you will. The creation of the world’s second largest multinational cement producer draws closer.

US: HeidelbergCement and Italcementi have reached an agreement with the US Federal Trade Commission (FTC) to allow the company’s merger to proceed on schedule. The FTC accepted the proposed divestment of operations in the US, primarily consisting of Italcementi’s Martinsburg cement plant in West Virginia and up to eleven terminals on 17 June 2016. All competition approvals necessary for closing the Italcementi acquisition have now been obtained.

“We are very pleased with the positive decision of the Federal Trade Commission,” said Bernd Scheifele, Chairman of the Managing Board of HeidelbergCement. “We are now on track to close the acquisition of the 45% stake in Italcementi which we are planning together with Italmobiliare for the beginning of July 2016.” The divestment process for the assets in US has already started and significant interest has already been recorded. Citi is mandated as sell side advisor for the disposal.

The planned full acquisition of Italcementi will proceed in two steps following approval by the necessary competition bodies. HeidelbergCement will initially acquire a controlling stake of 45% from Italmobiliare. HeidelbergCement will then propose a public mandatory offer to the remaining shareholders for the acquisition of their shares in return for a cash payment. The exact timing of the mandatory offer will be released at a later date. HeidelbergCement expects the entire transaction to be completed in the second half of 2016.

HeidelbergCement 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. 

US: According to Imperial Valley News, following a public comment period, the Federal Trade Commission (FTC) has approved a final order settling charges that the merger of Lafarge and Holcim would likely harm competition in 12 markets for Portland cement and two markets for slag cement.

Under the order, first announced in May 2015, the two companies are required to divest cement plants, quarries, terminals and other assets in the 12 states of Illinois, Iowa, Louisiana, Massachusetts, Michigan, Minnesota, Montana, New Jersey, New York, Ohio, Tennessee, Wisconsin, as well as several locations in Canada. The commission vote that approved the final order was 4-1, with commissioner Joshua D Wright voting no.

US: According to local media MiBiz, the planned merger of Lafarge and Holcim will result in a new owner for a Holcim-owned cement plant in Grandville and could lead to more competitive cement pricing in the West Michigan market.

In response to an antitrust complaint filed by the Federal Trade Commission (FTC) that the LafargeHolcim merger 'would likely substantially lessen competition,' in 12 US markets, including in Grand Rapids, the parties have agreed to divest 24 facilities in North America. Among the sites is a Holcim (US) -owned cement plant in Grandville, which the company plans to sell to Buzzi Unicem USA. The acquisition of the Grandville plant should be completed in July 2015, according to Patrick Lydon, vice president and general counsel at Buzzi Unicem. Lydon said that the Grandville plant would be the company's first venture into the Michigan market. He does not expect any significant changes to operations.

The FTC weighed in on the proposed merger to create LafargeHolcim, the world's largest cement company with a projected US$35bn in annual revenues, because it said that the acquisition would further concentrate the industry in 12 'already highly-concentrated' markets. In the affected markets, Holcim and Lafarge are either the only two suppliers of Portland cement or slag cement or are 'at most' two of just four suppliers.

"If the merger between Holcim and Lafarge went through as originally planned, it would have likely had a short-term impact, but even more of an impact on long-term competitive pricing," said Greg Kerkstra, president and CEO of Grandville-based Kerkstra Precast Inc. "Now that the FTC has determined a divestiture of some of these assets in particular markets, that could actually encourage even more competition than before the merger, in our eyes."

Other affected markets in Michigan include Detroit and northern Michigan. Holcim is selling a cement terminal in Elmira, Michigan to Buzzi Unicem and it is seeking buyers for terminals in Detroit and Dundee.