LafargeHolcim, the international provider of construction materials, has entered an agreement to exit LafargeHolcim Vietnam. It will selling its entire 65 per cent holding in the Vietnam joint venture to Siam City Cement Public Company Limited, Thailand’s second largest cement producer.
The divestment values the Vietnam-based unit at 867 million Swiss francs ($890 million), LafargeHolcim said in a statement. Thus, Siam City Cement will need to pay some $580 million for the acquisition.
Closing of the transaction in Vietnam is subject to customary regulatory and shareholder approvals, as well as to a right of first refusal of LafargeHolcim’s joint venture partner, and is expected to occur in the fourth quarter of 2016, it added.
LafargeHolcim Vietnam, whose Vietnamese partner is the Vietnam Cement Industry Corp with a 35 per cent stake, is a ready-mix concrete producer, currently operating seven plants in the country. It also has an integrated plant and four grinding plants with an annual grinding capacity of 6.3 million tonnes. Its Swiss joint venture partner posted 29.5 billion Swiss francs of net sales in 2015.
The intention to divest from LafargeHolcim Vietnam was leaked several months ago as Holcim completed the merger with Lafarge through purchasing 87.46 per cent of the share capital of the French counterpart.
Meanwhile, the company post merger has also been exiting other markets, including Asian countries of India and South Korea.
Siam City Cement was also the buyer of LafargeHolcim’s divestment from its Sri Lanka subsidiary.
LafargeHolcim did not state the reason for its getaway from Vietnam, but according to industry insiders, the Vietnamese construction substance market started to slow down, with the total manufacturing capacity already outpacing consumption.
However, Thai players are still very active. Apart from Siam City Cement, building material major Siam Cement Group had earlier committed to invest up to $6 billion in Vietnam’s plastics and packaging industry, following several recent acquisitions of local leading firms.