Raysut Cement Company, Oman’s largest producer, is pushing ahead with a US$172m deal to buy a UAE competitor. The acquisition of Pioneer Cement, a joint venture set up between Ras al Khaimah Investment Authority and Penna Global Investments, is being financed by a consortium of banks led by Bank Dhofar of Oman, Raysut said 3rd January, in a filing to the Muscat Securities Market.
Analysts at Global Investment House in Kuwait last month downgraded Raysut’s stock to "reduce", citing increasing competition with UAE companies and calling the planned acquisition of Pioneer "not fruitful". In fact the deal would cut Raysut’s 2010 year-end profits by 20 per cent to 22.9m rials, the analysts said.
Hopefully this latest deal from Raysut will help bring some pricing stability in both the UAE and Oman as well as some consolidation to a somewhat fragmented cement sector.
Cement prices have been on the decline in Oman. They averaged about US$70/t a tonne for the first nine months of 2010, compared to US$82.70/t in the same period in the year before. (Original reporting from The National).