Displaying items by tag: shareholders

Thailand: The Ratanarak Group, through its subsidiary Sunrise Equity, has increased its stake in Siam City Cement to 71.88% by acquiring a 25.54% share from Singapore-based Jardine Cycle & Carriage for US$354m. This move consolidates the Ratanarak Group's position as the sole major and controlling shareholder.

Australia: CRH has won approval from Adbri shareholders to acquire 57% of the company for close to US$1.4bn. The deal was the result of a unanimous vote in favour on 12 June 2024.

Adbri’s lead independent director and chair of its independent board committee Samantha Hogg said “A combined CRH and Adbri will bring growth opportunities, new talent and innovation to continue to strengthen Adbri’s product offering in Australia.”

Spain: The Mexico-based owner of the Spain-based cement producer FCC, Carlos Slim, is reportedly planning to spin-off its cement and real estate assets into a separate business. The new entity, to be known as Inmocemento, would then be listed on the Madrid stock market, according to Reuters. Slim directly owns around 12% of FCC and controls a further 76% of the company through investment vehicles Inversora Carso and Operadora Inbursa.

Inmocemento would take FCC's cement plants, the majority stake it owns in the real estate developer Realia and a minority stake in Metrovacesa. Current FCC shareholders would receive Inmocemento stakes equivalent to their holdings in FCC.

FCC currently owns assets in different industries such as construction, water and sewage, waste management, cement and real estate. FCC's cement units reported revenues of €614m in 2023, while income from real estate was €254m. Together, these sectors represented 9% of FCC's revenue. It operates its cement business via the Cementos Portland Valderrivas subsidiary.

FCC said in a financial disclosure that its board believes that the move would boost shareholder value as the new and existing companies are likely to be worth more apart than together.

Australia: Boral has endorsed Seven Group Holdings' (SGH) increased takeover offer after the bidder enhanced its proposal. According to Business News Western Australia, Boral is now recommending its shareholders accept SGH's offer, previously rejected in March 2024. The offer has risen from an initial US$0.98/share to a maximum of US$1.11/share. An on-market buyback is also an option at up to US$4.19/share, with total shareholder value estimated between US$4.02 and US$4.17.

Boral's independent corporate advisory company, Grant Samuel, now finds the offer ‘reasonable’. SGH has increased its stake in Boral to 78.8% and proposes further governance adjustments by adding two more executives to Boral's board.

Managing director of SGH, Ryan Stokes, said "We are pleased to offer Boral shareholders the maximum consideration under our offer. Both new and existing SGH shareholders also stand to benefit from the US$0.20/share fully franked dividend that SGH will pay following completion of the offer." The offer period is extended to 15 May 2024.

We return this week to look at Holcim’s decision to separate and list its business in North America. This is big news because the region delivered nearly a third of the group's earnings in 2022 and a quarter of its net sales. The building materials market in North America has shown considerable potential for Holcim and other companies in recent years. The question then is why would Holcim want to divest this wealth generating potential from the rest of the business? The answer lies in how much Holcim US could be worth in the future.

The group announced at the end of January 2024 that it is working towards a full capital market separation and US listing of its North American business. The transaction will be run as a spin-off with the intention of benefiting all of the company’s present shareholders. The intention is to create the “leading pure-play North American building solutions company,” with the US listing expected to complete in the first half of 2025. The new company will be run separately and independently to the rump of ‘non-US Holcim’ with its own management structure and directors. Crucially, non-US Holcim itself does not intend to have any cross-shareholding in the new company. Holcim’s current chief executive officer Jan Jenisch will focus on his role as chair from May 2024 with the appointment of Miljan Gutovic. Jenisch will then lead the work on spinning-off the US business before later, possibly, taking a senior position at one of the resulting companies, according to his comments at an investors and analysts’ conference.

Holcim says it is doing this to maximise the return to its shareholders. This dodges the question, given that public companies partly exist to do this anyway, so the decision may be more about generating value for shareholders in the short term rather than, say, increasing value for both shareholders and stakeholders by building a bigger business empire. Jenisch explained the decision as a natural evolution of the company’s strategy and he repeatedly described himself as “the first servant of the shareholders.” The divestment should make both companies more valuable through corporate reorganisation rather than buying new companies or making new products. The other thing to consider is that Holcim's shareholders have not been shy in making their requirements known going back to the arguments over the share split when Lafarge and Holcim merged in 2015 and the subsequent battle for the direction of the group.

A spin-off is a form of corporate divestment where a parent company creates a subsidiary as a separate entity with its own management structure and it distributes the shares in the new company between its existing shareholders. Typically it is seen as a good option for the shareholders of the original company compared to other types of divestment such as a split-off, an equity carve out or a straight sale. The benefits include generating proceeds from the divestment, simplifying the corporate structure, increasing the value of both companies and there are tax advantages too. The risk of going for a spin-off though is that the new company may start with operational or financial issues as it starts going solo. It may also have difficulty dealing with market preconceptions about what the new organisation is like based on the parent.

Jenisch said that the group had considered going for an initial public offering for the North American business but had decided that this was riskier. Holcim expects and hopes that the value of the two companies will be higher separately than as they are at present as part of one company. Hence, its investor presentation describing the spin-off was full of plenty of arguments positioning how strong the US business is and could be. Chief financial officer Steffen Kindler also pointed out during the investor conference that one of the reasons the company opted for a full separation was to better secure Standard and Poor's (S&P) listing criteria, another sign that the plan is targeted towards securing as much value as possible. The company is targeting net sales of over US$20bn/yr by 2030 for its North American business.

The strength of the US market in recent years has been evident from the actions of other companies in the building materials sector. Ireland-based CRH moved its primary listing to the US in 2023 due to its high proportion of earnings from the country and the potential in the future from “continued economic expansion, a growing population and significant construction needs.” Another big recent transaction in the sector was the merger of the US operations of Summit Materials and Cementos Argos that completed in early 2024. The diverging prospects of the US economy versus Europe have been driving this trend. Listing on a US exchange can also give companies potentially higher valuations along with access to a larger market and easier connections to private equity to help fund expansion.

With this in mind Holcim’s decision to do something with its North America operations makes sense as it helps the company to increase the return to its shareholders, grow the business and remain competitive. The dominance of the US market on Holcim’s balance sheet is increasingly making the company a US one but without the advantages of being locally based. A spin-off suits the Milton Freedman dictum that companies only exist to maximise shareholder return but there is always a debate to be had about how to actually do this. Splitting Holcim’s growth-based US business from the more sustainability-minded European one ties into this for example, as differences in corporate social responsibilities grow between the regions.

Finally, on an emotional level giving up a key business area feels like a wrench to the status quo. Holcim will no longer be the largest cement producer outside of China once the separation completes. We await further details on how the two companies will be connected following the split… but change is coming.

US: Summit Materials has announced that its shareholders voted in favour of its proposed merger with Cementos Argos subsidiary Argos USA. Dow Jones Institutional News has reported that the parties expect the deal to conclude on 12 January 2024.

Australia: Ireland-based CRH and Barro Group have partnered to jointly acquire Adbri outright. The companies currently control 47.6% of Adbri combined – a 4.6% stake under CRH and a 43% stake under Barro Group. Under their offer to shareholders, CRH will raise its stake in the company to 57%. The partners have valued the company at US$1.4bn as part of their proposal. Following the conclusion of any such deal, the companies reportedly plan to delist Adbri from the Australian Securities Exchange (ASX).

CRH chief executive officer Albert Manifold said "Adbri is an attractive business with quality assets that complement our core competencies in cement, concrete and aggregates. With its leading market positions in Australia, we are delighted that this opportunity has presented itself to us.” He added “It is the next logical step for CRH to expand our existing presence in Australia, where we have been operating for 15 years. We look forward to working with the Barro family over the coming years to enhance the long-term performance of the business, leveraging our scale, industry knowledge and technical expertise to improve long-term growth and operating performance and drive value to achieve the true potential of the business.”

Tanzania: Mbeya Cement plans to reform its board of directors and appoint a new chair. The measures are part of an agreement between the government and other shareholders, including Zambia-based Lafarge Cement. Daily News has reported that the government helped Mbeya Cement to pay off US$67.9m-worth of debt.

Holcim’s East and South Africa area manager Rajesh Surana said “It is another milestone as we today sign the agreement on behalf of other shareholders, aimed at ensuring that Mbeya Cement operates on profit to rebuild growth for improved performance.”

Ireland: 26 hedge funds have bought or expanded stakes in CRH since 30 June 2023. Bloomberg has reported that existing shareholders that expanded their holdings included US-based Baupost Group and Soros Fund Management.

CRH is due to complete its transition into a primarily US-listed company in late September 2023.

South Africa: PPC South Africa Holdings says that it has concluded a deal to sell 10% of its shares to employees via the PPC Employee Share Ownership Trust. News24 Online News has reported that all South African employees of the company will be eligible to buy shares, provided that they are not already currently participating in its long-term incentive programme. The total value of shares transferred under the deal will be US$20.4m

CEO Roland van Wijnen said "PPC has been built upon the shoulders of its employees, and this transaction provides a meaningful way of rewarding those in South Africa who do not participate in PPC’s long-term incentive plan to share in the creation of shareholder value. We are pleased that the terms of the transaction are such that it stands to benefit employees for many years to come.”