24 posts
TimePosted 12/10/2008 20:05:00

A Belgian, a Canadian and an Egyptian walk into a cement company...

The Lafarge ownership saga continues. Last month saw Albert Freres - Group Bruxelles Lambert - seemingly spend close to Euro 100m mopping up Lafarge shares on the French stock exchange, according to official filings, at prices ranging between Euro 70-80 per share, and in consequence now pushing up its stake in Lafarge to almost 25 per cent, while Nassef Sawiris, of Orascom fame, has his own sizeable Lafarge stake at around the 13 per cent level. And if we are to believe reports, both groups have various 'put options' if the share price drops even further. At the same time, another French group now said to be looking at Lafarge in more detail is the private equity arm of LVMH which clearly sees added value in Lafarge stock at today's low prices. Whether there are any on-going linkages between LVMH and Albert Freres remains to be seen.
Meanwhile Nassef Sawiris is proving to be a mixed blessing for Texas Industries (TXI) management board. Having quickly built up a 15 per cent stake in this major US  cement, aggregates and concrete products group, he has recently sent a letter to the company’s shareholders, petitioning them to oust two influential board directors for their role in a lack-lustre corporate performance over the past 12 months. The same two directors who might, or might not, have been instrumental in blocking any further stake-building by this cash-rich Egyptian entrepreneur. It would be an unacceptable level of speculation to link Lafarge and TXI under some future shared ownership structure, so lets move quickly on...
With Cemex ADR's briefly trading at about US$4.50 last Friday (October 10th) before closing the day at US$7.00, and a declining Mexican Peso adding to company woes, continuing speculation as to the overall health of the world's No 3 cement producer continues to worry analysts and speculators alike. Apparently a sizeable slice of Cemex debt is mired in a complex web of derivatives trades and while Cemex leaders are pushing ahead with various asset disposals, the latest in Australia, their actions may not be enough to assuage fears that the company might have insufficient cash to meet all operating and financial requirements. If things worsen we might regretably see Cemex exit from UK markets, a region also likely to see a sizeable downturn in cement and building material sales in 2009. And if....
...this was to happen what a positive opportunity for someone to come in and pick up the pieces, with Holcim a likely front-runner, consolidating its UK Aggregates Industries business with three cement works, more quarries and ready-mix operations. However Holcim has its own regional problems and could accelerate its US plant closure program, if markets there continue to deteriorate ahead of the planned opening of its massive 4Mta Ste Genevieve works. If it did push ahead with an early plant closure program, Holcim would be able to make up any temporary US supply shortfalls with a resumption of cement exports out of Spain, where its current production surplus levels are now rising as a result of a serious domestic downturn in Spanish cement sales. On the plus side, the recent collapse in dry bulk freight rates might prove a useful cost saving on trans-Atlantic routes. And who said cement was dull!


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