HeidelbergCement to acquire Italcementi

29 July 2015

HeidelbergCement has announced plans to acquire rival cement and materials producer Italcementi. The German company has agreed to acquire a stake 45% in Italcementi from Italmobiliare. It says once this deal is complete it will make an offer for all outstanding shares in Italcementi.

The price agreed with holding company Italmobiliare is € 10.60 per Italcementi share. The full purchase price of € 1.67 billion is to be paid in cash and up to 10.5 million newly issued HeidelbergCement shares. Italmobiliare said this arrangement would make it HeidelbergCement’s second largest industrial shareholder, and that it would take a seat on the company’s Supervisory Board.

This deal is subject to regulatory approval, and is expected to close in 2016. HeidelbergCement said the subsequent offer for remaining Italcementi equity would be made at € 10.60 per share in cash, valuing the company at € 3.7 billion.

Commenting on the rationale of the deal, HeidelbergCement Management Board chairman Dr Bernd Scheifele said, “There is no other major group in the industry which offers a similar complementary fit to our own operations. With the market recovery gaining traction in Southern Europe and the US, it is now the right time for us to accelerate our growth with this transaction. We see significant potential for value creation with the realisation of synergies and the implementation of our proven standards of operational and commercial excellence.”

Italcementi CEO Carlo Pesenti added, “The agreement reached today, represents both for Italcementi and HeidelbergCement the best option in terms of future development and value creation, well above what the two companies could have achieved on a stand-alone basis.”

HeidelbergCement said it was targeting minimum savings of € 175 million by 2018. “The largest synergy contributions are expected to come from the operational business and from sales and general administration. Further synergies are expected to be generated in the commercial area and in purchasing,” said a company statement.

According to Italmobiliare, the new group will be global no.1 in aggregates, no. 2 in cement and no.3 in ready-mixed concrete. Italcementi had revenues of € 4.1 billion last year, while HeidelbergCement’s sales were € 12.6 billion. The combined group will have an anual production capacity of some 200 million tonnes of cement, 275 million tonnes of aggregates and a presence in more than 60 countries.

The deal follows the merger of Lafarge and Holcim, which was completed earlier this month. It saw the formation of by far the largest heavy materials producer in the world, with annual sales of some CHF 33 billion (€ 31 billion). That transaction also saw an agreement with CRH to acquire € 6.5 billion worth of Lafarge and Holcim businesses the two companies had to divest to win regulatory approval for their merger.

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