The controlling shareholders of publicly listed Lafarge Republic Inc. (LRI) have firmed up a deal to sell the local unit to British firm CRH plc for about P59.7 billion following a global merger between global cement giants Lafarge and Holcim.
In a disclosure to the Philippine Stock Exchange Monday, LRI said its principal investors had agreed to sell the company at P10.26 per share, subject to adjustment after closing conditions. This suggested a valuation of P59.7 billion for 100 percent of LRI based on about 5.82 billion outstanding shares at present, not too far from the cement company’s market capitalization of P59.98 billion based on Monday’s closing price of P10.18 per share.
The only assets to be carved out of the CRH deal would be Lafarge Republic Aggregates, Inc. (LRAI) and Star terminal at the Harbour Centre Manila, both would be absorbed by Holcim Philippines Inc. and affiliate Holcim Mining Development Corp.
Based on the disclosure, the major shareholders of LRI—Lafarge Holdings (Philippines), Inc., South Western Cement Ventures Inc., Calumboyan Holdings Inc. and Round Royal Inc., representing 88.85 percent of LRI’s outstanding shares—have agreed with CRH to include LRI’s investment in Lafarge Iligan Inc. and Lafarge Mindanao Inc. among the assets to be sold to CRH.
Lafarge Iligan and Mindanao have a combined annual cement manufacturing capacity of about 800,000 metric tons equivalent to 10 to 15 percent of the Lafarge group’s total capacity.
“The deal suggests that the original M&A (merger and acquisition) plan in the Philippines between Holcim and Lafarge has changed considerably. Originally, Holcim was supposed to acquire Lafarge Iligan and Star Terminals. However, the disclosure suggests this is no longer happening as both assets Holcim was supposed to buy from Lafarge have been included in the Lafarge-CRH deal. CRH (and partner Aboitiz Equity Ventures) appears to be paying the full price,” said Jose Mari Lacson, head of research at Campos Lanuza & Co.
CRH is a global leader in the manufacture and supply of a diverse range of building materials and products for the modern built environment. With operations in 34 countries worldwide, CRH is the largest building materials company in North America, a regional leader in Europe and has strategic positions in Asia. Its shares are listed on the London and Dublin stock exchanges as well as on the New York Stock Exchange in the form of American depository shares.
In the meantime, LRI accepted the offer of Holcim Philippines to acquire LRAI for P2.647 billion and Star terminal for P410 million.
LRAI supplies rock, stone cement and other minerals required by builders including quarrying and crushing. It has a plant in Angono, Rizal and is engaged in quarrying operations covered by mineral production sharing agreement with a term of 15 years from 2008. In late 2012, it commissioned a new plant that will enable it to supply an additional two million metric tons of aggregates a year.
The port terminal at Manila Harbour gives Metro Manila customers a more accessible pick-up point for cement purchases.