Displaying items by tag: Merger

China: The Assets Supervision and Administration Commission has announced the reorganisation of the China National Building Materials Group Corporation (CNBM) and China National Materials Group Corporation (Sinoma). The commission did not provide further details on the merger.

CNBM is the world's major non-metal materials manufacturer, and cement equipment and engineering service provider, with total assets over US$64.5bn. Sinoma is also an industry leader in the construction materials industry. China has started accelerating the reorganisation of its SOEs to improve their competitiveness.

UK: Mechanical power transmission companies David Brown and Santasalo merged on 1 June 2016 to create David Brown Santasalo. Clyde Blowers Capital, an industrial investment firm based in Scotland, owns the business.

The merged company intends to serve markets in commodities, marine, defence, power, industrial and consumer end sectors. Its core business lies in gear engineering and power transmission products. The new company contains more than 1000 employees, seven major manufacturing plants and 23 service centres across six continents.

“David Brown Santasalo covers varied end markets including naval ships, minerals processing and the manufacture of a wide range of pulp and paper products. Across all these markets, our core differentiator is our fundamental capability to design and engineer gear systems for the world’s most demanding applications,” said Thomas Burley, Chief Executive Officer of David Brown Santasalo. He added that the company intends to focus on expanding its sales and service network, enhance its product offering and invest in its manufacturing base around the world.

India: Dalmia Bharat has merged OCL India Limited and Dalmia Cement East Limited ‘Bokaro’ with Odisha Cement Limited. The resulting company will be called OCL India Limited. It has also amalgamated Adhunik Cement with Dalmia Cement (Bharat) Limited (DCBL) and transferred the power assets in Dalmia Cement Bharat Power Ventures Limited to DCBL.

In a statement the Indian cement producer added that the move would simplify its corporate structure leading to significant unrealised benefits. It added that following the consolidation OCL will become the largest Portland slag cement producer in India.

In early March 2016 Dalmia Bharat received approval from the Competition Commission of India to acquire a 15% stake in its subsidiary Dalmia Cement Bharat from private equity firm KKR for over US$181m in a cash and stock deal. After the purchase, Dalmia Cement Bharat became a wholly-owned subsidiary of Dalmia Bharat.

Dalmia Bharat runs cement and power businesses. The group has a presence in southern and eastern India, including the northeast. Dalmia Bharat has a cement production capacity of 25Mt/yr.

India: McNally Bharat Engineering Company has decided to merge itself, its subsidiary McNally Sayaji Engineering and EMC with Kilburn Engineering. Its board of directors will now value the companies to determine the share exchange ratio and draft the scheme of amalgamation, according to Accord Fintech.

McNally Bharat Engineering Company is an engineering company providing turnkey solutions across many industries including cement, material handling, mineral beneficiation, pyroprocessing, power, steel and others. Its subsidiary McNally Sayaji Engineering focuses on crushing and raw mineral processing.

South Korea/Saudi Arabia/Morocco: LafargeHolcim has confirmed plans to divest its assets in South Korea and Saudi Arabia and to enlarge its presence its Morocco. The announcement was made as part of the release of its annual results 2015. The sales form part of the group’s Euro3.2bn divestment program

In Morocco, the group signed an agreement with SNI, its partner in the country, at the same time as the Lafarge-Holcim merger to enlarge its joint-venture by merging Lafarge Ciments Maroc and Holcim Maroc to create LafargeHolcim Maroc. LafargeHolcim and SNI would own a 64.7% stake in the new company once the merger is complete. The group expects to gain a synergy savings of Euro41m over two years from the merger.

LafargeHolcim and SNI also agreed to create a common platform in French-speaking Sub-Saharan Africa. The merger is expected to close in the third quarter of 2016 subject to regulatory authorities’ approval, customary closing conditions and the approval of the shareholders of Lafarge Ciments Maroc and Holcim Maroc.

In South Korea, the group has confirmed that it has signed an agreement with a consortium of private equity funds - Glenwood and Baring Asia - for the divestment of Lafarge Halla Cement in South Korea for Euro427m. The sale is expected to complete in the second quarter of 2016. Lafarge Halla Cement runs one 8.3Mt/yr integrated cement plant, a distribution network across the country and has around 500 employees.

In Saudi Arabia the group has signed an agreement for the sale of the Group’s 25% stake in Al Safwa Cement Company to El-Khayyat Group for total proceeds of Euro120m. This transaction is expected to close in the course of the third quarter of 2016.

Romania: Germany's HeidelbergCement has completed the merger of the three companies it owns in Romania. The three companies that are now merged under HeidelbergCement are Carpatcement, Carpat Beton and Carpat Agregate.

"The merger process takes into account our strategic position in relation to the economic environment, which is to overcome future challenges in order to use our resources to their full potential and to have a more efficient management of costs," said General Manager Florian Aldea.

HeidelbergCement is one of the leading manufacturers of cement, concrete and aggregates in Romania with three cement plants in Tasca, Chiscadaga and in Fieni. It also owns 19 concrete plants, seven quarries and six gravel aggregates units.

Vietnam: Lafarge Vietnam Company has become a unit of Holcim Vietnam Company following the merger between their parent companies.

The merger between Lafarge Vietnam and Holcim Vietnam, which is scheduled for completion in 2015, will help LafargeHolcim optimise its production in the context of oversupply, which has put local cement producers in difficulties, a Holcim Vietnam official has said.

In Vietnam, LafargeHolcim has five cement plants and eight ready-mixed concrete batching plants, with a capacity of 5.2Mt/yr of cement and 1Mm3/yr of concrete. LafargeHolcim will retain its brands of Lafarge and Holcim's products such as Lavilla (Lafarge) and Holcim Power-S (Holcim), according to Nguyen Cong Minh Bao, Head of Holcim Vietnam's Sustainable Development.

Holcim Vietnam presently holds a 26% market share in Vietnam while Lafarge Vietnam takes a 12% share, with their main products being cement, concrete and aggregate.

Switzerland: LafargeHolcim has successfully implemented the squeeze-out of Lafarge S A. With this, the shares of Lafarge S A are now delisted from Euronext Paris. The completion marks an important and final step in the merger process of the group's legacy companies and allows LafargeHolcim to continue focusing on delivering the synergies and progress with the integration.

With the successful squeeze-out, LafargeHolcim Ltd now owns 100% of the share capital and voting rights of Lafarge S A. Following the re-opened offer period, LafargeHolcim Ltd already held 96.41% of the share capital and at least 95.25% of the voting rights of Lafarge S A.

LafargeHolcim had offered the remaining shareholders of Lafarge S A a cash indemnification of Euro60 for each Lafarge S A share (net of costs) or a share indemnification of 9.45 newly-issued LafargeHolcim Ltd shares for 10 Lafarge S A shares. In this context, LafargeHolcim has issued a total of 633,776 registered shares with a nominal value of Euro1.85 each from authorised capital and acquired 10,086,921 shares of Lafarge S A for Euro60 each.

India: The India Cements Limited has announced that the pending approval of the Scheme of Amalgamation between Trinetra Cement Limited and Trishul Concrete Products Limited with The India Cements Limited and their respective shareholders by the High Court of Judicature at Madras has been extended until 31 December 2015 by the Registrar of Companies.

In early 2014 the top of the global cement producer charts looked very different to how it does today. The big four multinationals, Lafarge, Holcim, HeidelbergCement and Cemex, were clearly out in front and ahead of the rest of the global top 10. While there was discrepancy in their sizes, the largest, Lafarge (224Mt/yr) had just over twice the cement capacity of fourth-placed Cemex (95Mt/yr), with Holcim (218Mt/yr) and HeidelbergCement (122Mt/yr) between these extremes.¹ With an impressive 659Mt/yr of capacity between them, these four accounted for just shy of half of global cement capacity outside of China.

However, as those with even a passing interest in the cement sector will know, this is no longer the case. The merger between Lafarge and Holcim and the subsequent acquisition of Italcementi by HeidelbergCement has stretched out the range of the top producers significantly. Today LafargeHolcim has around 340Mt/yr of installed capacity and HeidelbergCement 200Mt/yr. Meanwhile Cemex is still 'stuck in the 90s,' with a capacity of around 92Mt/yr following the sale of its Croatian cement assets last week. The Mexican 'giant' is now almost a quarter of the size of LafargeHolcim. What does this mean for the world's number three (excluding Chinese producers) and what might the future hold?

Well... the old adage goes that you have to move forward to stand still. However, Cemex has not moved forward over the past two years, meaning that is hasn't kept up the pace with its immediate rivals. It hasn't been able to, hemmed in by the debt that it took on from its poorly-timed acquisition of Rinker in 2007. Indeed, Cemex is looking to contract further, with aims to shed a further Euro600 - 1100m of non-core assets in 2015.² Against improved positions at LafargeHolcim and HeidelbergCement, Cemex increasingly looks like an 'Americas specialist' rather than a full-blown multinational. A stake in Cemex LatAm Holdings is up for sale, but the sale of more cement plants may also be on the way. This is all being done to improve Cemex's investment grade rating from B-plus, four grades below investment grade.

If Cemex does have to shed further physical assets on the ground, it is very unlikely that it would chose to do so in the Americas, where it is a very major player. It is number one in Mexico, third in the US and well-postitioned in numerous growth markets in Central America. If push comes to shove, it is far more likely that it would sell assets that are further from home. These are in Europe, the Middle East and the Far East.

Cemex has 43% of its production capacity outside the Americas. Certain assets, such as those in Thailand, Bangladesh and the Philippines, may be appealing to CRH, which is already set to acquire LafargeHolcim divestments there and is known to be considering other purchases in the region.³ Cemex also owns several cement plants in better-performing EU economies like Germany and the UK. In Germany, the company has already completed a small downsizing exercise by selling its Kollenbach plant to Holcim (LafargeHolcim). Meanwhile, Cemex UK is a major player in the UK, where the Competition Commission has recently been very keen to increase the number of producers. Elsewhere, Cemex's share in Assuit Cement in Egypt could provide much needed revenue, as could its small stake in the Emirati markets.

Thinking more radically, and in keeping with the current trend of mega-mergers and large-scale acquisitions, could Cemex find itself the target of the next global cement mega-merger / acquisition? Certainly, its strength in Central and South America completely complements HeidelbergCement's lack of coverage here, making a future 'HeidelbergCemex' a potential winner.

The other option, if/when Cemex regains its investment rating, would be for Cemex to acquire or merge with a company further down the list of global cement produers. Africa is an obvious target, with rapid growth and a lack of Cemex assets at present. A foreigner buying up Dangote is probably out of the question, but PPC would be an interesting target, as would increasingly isolated Brazilian producers that could help shore up Cemex's South American position.

If the past 18 months in the global cement industry have shown anything, it is that we should expect the unexpected. It will be very interesting to see how all players, both large and small, will react to the recent goings on in the rest of 2015 and beyond.

1. 1. Saunders A.; 'Top 75 Cement Producers,' in Global Cement Magazine – December 2013. Epsom, UK, December 2013.

1. 2. Reuters website, 'Mexico's Cemex could sell part of business to pay down debt: CEO,' 10 February 2015. http://www.reuters.com/article/2015/02/11/us-mexico-cemex-idUSKBN0LF05320150211.

1. 3. Global Cement website, 'CRH investment spend set to pass Euro7bn with South Korea cement deal,' 12 June 2015, http://www.globalcement.com/news/item/3721-crh-investment-spend-set-to-pass-euro7bn-with-south-korea-cement-deal.