In its efforts to reduce debt and to improve its balance sheet, Cemex has reached an agreement with Holcim to sell all of its Australian interests to the Swiss group for approximately €1,145m or Aus$2,020m.
Notably this deal, provided it is approved by the Australian competition authorities and passes the Holcim due diligence assessment, would turn Cement Australia, which is currently 50% owned by Holcim, into a Holcim subsidiary and mark the return of the Swiss group to the Australian aggregates and ready-mixed concrete markets.
In order to secure the approval of the Australian competition authorities for the 2003 merger of Holcim’s Queensland Cement with Australian Cement Holdings (at the time owned jointly by Rinker and Hanson), Queensland Cement had to divest of its downstream operations. Cemex acquired Rinker in 2007, primarily to get its hands on the operations in the USA. Provided this deal goes through, Holcim would return to the Australian downstream market in a major way, with 83 quarries and pits, 249 batching plants and 16 other plants, mainly for making concrete pipes. The turnover last year amounted to €1,054m (Aus$1,860m) and the EBITDA was €177m (Aus$313m). In the first quarter of this year, Cemex’ Australian deliveries of aggregates decreased by 12% and volumes of ready-mixed concrete were down by 13%.
This deal makes it more likely that Holcim might seek to acquire HeidelbergCement’s 25% stake in Cement Australia in order to get 100% control of the Australian cement business, particularly as HeidelbergCement is looking to raise cash.