Mexican sell-off puts Australian concrete operations in Swiss hands
THE Mexican cement group Cemex has sold its entire Australian operations to Holcim Ltd for $2.02 billion, just two years after paying $16 billion for its former owner, the cement manufacturer Rinker Group.
Pending regulatory approval, Holcim plans to take over 83 aggregate operations with a billion tonnes in reserves of crushed stone, sand and gravel, 249 concrete plants, and several pipe and concrete product plants.
A company spokesman said an integration team would decide whether to keep all 2800 Cemex and 1300 Cement Australia employees.
"If you look at how Australia is coping with the worldwide recession, then you see that this country copes very well with the situation," Holcim's chief executive, Markus Akermann, said in a conference call, adding the economic stimulus packages had boosted construction demand.
The $2.02 billion purchase price was equivalent to 6.6 times the assumed 2009 net earnings, and Holcim yesterday said it would finance the purchase entirely by selling 55.4 million shares, pending the outcome of an extraordinary general meeting on July 8 and approval from Australian authorities.
Holcim, based in Switzerland, has also bought a further 25 per cent stake in Cement Australia, giving it total 75 per cent ownership. Mr Akermann said there were no plans to buy out HeidelbergCement, which owns the other 25 per cent.
"So far our position in Australia had been kind of unfinished because we had only been in cement production," another Holcim spokesman, Peter Gysel, told BusinessDay. "With [this purchase] we can also implement downmarket sales."
Cemex had struggled to repay $US18.8 million in debt after it bought Rinker Group and Humes Pipes in mid-2007, just a few months before the subprime crisis started to unfold in the US.
More than 80 per cent of Rinker's profits were from the US, but the global recession significantly shrunk home construction in the US and Spain.
Cemex's chief executive, Lorenzo Zambrano, earlier this year pledged to sell more than $US2 billion of assets to refinance about $US14.5 billion of debt. Cemex failed to sell a $500 million bond earlier this year.