Filaret Galchev, owner of Russia’s largest cement company Eurocement, informed Holcim after the Swiss market closed on Friday that he had just built up a 6.52 per cent shareholding in the world’s No 2 cement producer. This tied in with a sharp rise in Holcim’s share price late Friday which saw it increase rapidly from CHF94 to CHF110 at the market close. The Swiss stock exchange initially reported that there had been a mistrade, but later corrected its statement to report that it was an actual trade.
Speculation that this move reflects a desire by Eurocement to take over Holcim is, however, misguided in our view. The financial resources of Filaret Galchev are unclear despite a recent Forbes survey that assessed his personal wealth at US$3.1bn.
As JP Morgan analysts comment: "The seven cement companies that we research are currently trading on an average of 5.5 times their 2007 EBITDA, suggesting that Eurocement may be worth around $8.25bn, which is less than one-third of Holcim’s stock market value".
In our view, Filaret Galchev is doing two things at present: (a) putting some of his capital into a more secure environment away from the more volatile Russian banking and stock market sectors and secondly (b) sending out a signal that he wants Eurocement to link up with an international partner, enabling the group – as well as Galchev himself – to become more an international player. This was made clear in an exclusive five page interview in June 2003 within International Cement Review in which he laid out his plans in some detail. (CemNet subscribers can search and download the full interview in the article research section of CemNet – keyword Galchev).