State-owned cement producer PT Semen Indonesia to buy 80.6% share in PT Holcim Indonesia worth $1.4 billion from French company LafargeHolcim. Both parties had signed Conditional Sales & Purchase Agreement on November 12.
LafargeHolcim decision to divest Holcim Indonesia is part of the company’s ongoing portfolio review. The assets to be sold to Semen Indonesia include the entirety of LafargeHolcim’s operations in Indonesia, which consists of 4 cement plants, 33 ready-mix plants and 2 aggregate quarries.
“As part of our Strategy 2022 – ‘Building for Growth’ we have committed to divestments of at least CHF 2 billion. Today’s announcement is an important milestone in reaching our target and to increase our financial strength. The proceeds from this transaction will significantly improve our debt ratios with the target of 2 times Net Debt to Recurring EBITDA to be achieved by the end of 2019,” says Jan Jenisch, CEO of LafargeHolcim, in a statement.
Semen Indonesia’s corporate secretary Agung Wiharto says that Semen Indonesia’s subsidiary PT Semen Indonesia Industri Bangunan will be the direct owner of Holcim Indonesia after the transaction. He adds that the acquisition will expand the company’s plant network in the country, diversify new products to offer to customer, improve distribution and cost of material efficiency, and strengthen its ready mix business. . The company has signed loan facility agreement amounting $1.28 billion with Bank BNP Paribas, Deutsche Bank AG Singapore Branch, Maybank Kim Eng Securities Ltd, MUFG Bank and Standard Chartered Bank.
The $ 1.4 billion price tag reflects a price of Rp 3,388 per share ($1=Rp 14,844). Holcim Indonesia share price has been climbing from below Rp 600 in July to Rp 2,000 in Tuesday opening. The company performance has been declining in the past few years, in the first half of this year Holcim Indonesia suffered Rp 539 billion loss compared to Rp 435 billion loss in the same period last year. While revenue remain flat.
Semen Indonesia was said to compete with China’s Hongshi Cement for the deal.