Lafarge to buy-out Chinese joint venture
By Chris Sleight04 March 2015
Lafarge has signed an agreement to acquire the 45% stake held by Shui On Construction And Materials (SOCAM Development) in Lafarge Shui On Cement. The deal is worth HK$ 2.55 billion (US$ 330 million) and is subject to the completion of Lafarge’s merger with Holcim.
Lafarge Shui On Cement has a total cement production capacity of 32 million tonnes. Its facilities are in South West China, in the provinces of Yunnan, Sichuan, Guizhou and the city of Chongqing, which is in Sichuan Province, but which is under autonomous municipal control.
Following the transaction, which is subject to the approval of SOCAM shareholders, Lafarge Shui On Cement would become a wholly-owned subsidiary of LafargeHolcim.
Lafarge and SOCAM agreed to set up their joint venture in 2005, with SOCAM initially holding 55% and Lafarge 45%. At the time of its inception it rolled together Lafarge's cement operations in mainland Chinese in Sichuan Province, Chongqing and Beijing, with SOCAM's cement operations in Sichuan and Guizhou provinces, and Chongqing. Acquisitions of cement plants in Yunnan followed shortly afterwards.
At the time of the deal, the two companies said this made it the largest cement producer in South West China and a top three layer nationally.
As the largest cement producer in the South West Region – and one of the top three players in all of China.
Lafarge’s merger with Holcim is expected to close this year. There was a major milestone earlier this year when CRH agreed to acquire a package of businesses the two companies were required to divest to gain regulatory approval for the merger.