S Korea’s Asia Cement wins bid to acquire Baring PE-owned Halla

Blue tile on cement.

South Korean cement producer Asia Cement Co. is set to acquire Halla Cement Corp in a deal that will see the exit of Hong Kong-based Baring Private Equity Asia, which wholly owns the firm.

Asia Cements’ proposed bid for Halla Cement is said to have ranged from 700 billion won ($624.5 million) and 800 billion won ($713.7 million).

The sale advisor for this deal is Citigroup Global Market Securities Korea. This winning bid saw shares of Asia Cement surge in value by up to 29.7 per cent, closing Friday at 118,000 won ($105.27). Asia Cement outbid Sungshin Cement Co.,  Aju Corporation Co. and private equity (PE) fund LK Investment Partners to acquire the target company.

Founded in 1998, Halla Cement Corp. produces and sells cement in South Korea. Its products include Portland cement; slag cement; clinker, which is a form of semi-processed cement; and other aggregates. It is also involved in the mine development business.

With around 500 employees, it operates one integrated cement plant with an annual cement capacity of 9 million tonne and has the unique competitive advantage of owning a coastal plant with its own port facilities providing access to cost-competitive coastal transportation links.

Formerly known as Lafarge Halla Cement Corporation, it rebranded to Halla Cement Corp. in May 2016 following its acquisition by Baring PE Asia and Glenwood in a deal valued at around 550 billion won ($487.6 million). Baring subsequently bought out Glenwood’s stake to fully own the firm.

According to media reports, Baring PE Asia was seeking between 600 billion won ($535.3 million) and 800 billion won ($713.7 million) for Halla, whose operating income increased 43 per cent to 62.8 billion won in 2016.

The acquisition of Halla Cement will see Asia Cement grow its market share from 7 per cent to 20 per cent of the market, granting it parity with current market leaders Ssangyong Cement Industrial Co. and Hanil Cement Co. Asia Cement mostly serves the inland areas of South Korea while Halla has factories in coastal districts.

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