Vassiliko & Cyprus Cement merger still under scrutiny

The Commission for the Protection of Competition (CPC) expressed its concern about the preliminary agreement between Vassiliko Cement Works (VCW) and Cyprus Cement Company Pcl (CCC) and will proceed to fully investigate

the possibility of market concentration, as the CPC ascertained that any such deal between the two companies would cause a serious anticompetitive behaviour.

Vassiliko Cement Works signed an agreement with Cyprus Cement Company Pcl under which the two companies would commonly manage the operations regarding the production and sale of cement, as well as the operations of the quarry and ready mix business lines. VCW will acquire the cement-related operations of CCC as well as CCC’s investments in Latouros Quarries, CCC Aggregates Ltd, Athinodorou Beton-Transport Ltd, Athinodorou Beton-Estates Ltd, Athinodorou Beton Ltd and ELMENI (Quarries) Ltd. The agreement, however, is subject to certain conditions and prerequisites.

The preliminary agreement between VCW and CCC was signed on March 12, 2007 and also provides for the gradual reduction of CCC’s cement production in the next few years and its replacement by VCW’s planned new production line. The consideration is 18.2m new VCW shares, issued at the weighted average closing price in the 3-month period ending March 9, 2007, which is EUR2.89/share or CYP1.67/share. The agreement is subject to the approval by the Commission for Protection of Competition as the Cyprus cement industry is a duopoly with VCW holding around 75% market share and CCC the rest with an estimated annual cement and clinker production of 450k tons representing a market share of 25 per cent in the local market.

Vassiliko Chairman Andreas Panayiotou had previously told the Financial Mirror that if the merger is not allowed to proceed, then it would have a devastating impact on Cyprus’ ability to meet EU requirements in meeting tough environmental targets.