Thailand’s SCG unit takes over Vietnam Construction Materials in ASEAN operation push

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SCG Cement – Building Materials Company Limited, a subsidiary of Thai major SCG, has fully acquired Vietnam Construction Materials JSC from its existing owners, the company said in a filing.

The 100 per cent equity interest in the Vietnamese integrated cement operator is worth $156 million, while enterprise value of the transaction is $440 million, which includes net debt and additional efficiency improvement investment, SCG added.

With the cement production capacity of 3.1 million tonnes in central Vietnam, where the acquired asset is located, there is potential for further efficiency enhancements to the total capacity.

“Central Vietnam is characterized by a well-balanced supply and demand equilibrium of cement. Following this transaction, Siam Cement Group’s combined cement capacity across ASEAN (excluding Thailand) increases to 10.5 million tonnes, relative to the existing 23 million tonne capacity in Thailand,” the firm said.

Last week, SCG had another move to push its presence in Vietnam through the acquisition of another 25 per cent stake in Long Son Petrochemicals to hold the majority interest. The investment was said to help  it “achieve a sustainable growth in ASEAN.”

Beginning investments in Vietnam in 1992, SCG currently has 22 units in the country, operating in all three of its core business segments, including construction materials, petrochemicals and packaging.

In 2013, SCG had acquired 85 per cent of Vietnam’s largest ceramic tile producer Prime Group for $240 million, then snapped up the remaining stake for $61.17 million in 2015. The Thai firm also purchased 80 per cent of Tin Thanh Packing for $44.4 million two years ago.

Meanwhile, SCG is a shareholder at leading plastics companies Tien Phong and Binh Minh.

It had invested some $700 million in Vietnam-based projects by 2016 and said to mainly strengthen its operations in this country through M&A activity.

By the end of 2015, Vietnam was the second largest investment destination for SCG, after Indonesia.

Also read:

Thailand: Siam Cement ups stake to take over Vietnam’s tile maker Prime Group

Thailand’s SCG plans $6.2 billion ASEAN investment

Siam Cement to pick 25% more in Vietnam’s Long Son Petrochem for $36.1m