In Romania, the two groups hold four cement plants and two grinding stations, covering two thirds of the overall cement market valued at 600-700 million euros. What will happen with these?
The two groups will have to sell at least a unit in Romania to get the competition authorities’ approval considering they will come to control almost two thirds of the market, according to several market sources.
The two companies in 2012 posted overall sales of above EUR400 million in Romania. However, for the time being it is not clear if and what plants of Romania will be sold, but the representatives of the two groups maintain none of the Romanian production units will be closed down.
“Looking at markets individually, it is too early to say what will happen on each of them. As part of the merger, there will be a pro-active strategy through which there will be asset sales, set to account for 10%-15% of the new entity’s EBITDA, in order to get the approval of competition authorities,” Christian Meuter, Holcim group spokesman, told ZF.
At the same time, Lafarge representatives told ZF none of Lafarge or Holcim’s plants will be closed, but they will be sold if this is the case.
“There will be no layoffs. If competition authorities ask for asset sales, there will be no plant shutdowns, but we will sell some production capacities. We want to limit the impact over employees,” said Lafarge representatives.
The two companies have between 1,500 and 2,000 employees overall in Romania, according to ZF data.
Several market sources say that considering that a new entity putting together Holcim and Lafarge activities in Romania would hold over 50% of the market, the new group will most likely have to sell assets domestically.
Plant sales will be operated, though, only after competition watchdogs approve such a deal. Romania’s Competition Council stated it was waiting to be notified about the merger, but that the European Commission’s regulating body will handle the deal directly. On the other hand, the European Commission’s officials made no comments on the merger.
Which cement companies would be interested in buying plants in the countries where Holcim and Lafarge decide to sell from assets?
The biggest players in the field globally, beside the three European groups Lafarge, Holcim and HeidelbergCement, include Chinese companies such as CNBM, Anhui Conch or Jidong, Mexican Cemex, Russia’s Eurocement or Italy’s Italcementi, according to globalcement.com portal.
The ranking of the world’s 20 largest cement producers by installed production capacities include 8 Chinese companies.
“Buyers are few considering such a sale would happen amid a declining construction market. It will be hard for the two groups to find buyers,” says Valentin Mircea, senior partner at Mircea&Asociatii, a former Competition Council vice-president.
In Romania, both companies also operate in the aggregates and concrete industry. As a matter of fact, both Lafarge and Holcim are among the largest building materials producers on the Romanian market, each of them having invested over EUR700 million in domestic activities in the past two decades.
Lafarge Ciment, the main company through which French Lafarge is present in Romania, ended 2012 with revenue of EUR192 million and net income of EUR37 million, while Holcim Romania posted EUR213 million in revenue in 2012 amid net losses of EUR8.5 million, according to Finance Ministry data.
(English version by Catalina Apostoiu)