Argentina’s Loma Negra Seeks Buyer

Argentina’s Loma Negra Seeks Buyer
Published: 13 August 2004

Reported in the Wall Street journal, Argentina’s largest cement company, is putting itself up for sale in a deal that could attract global industry powerhouses, people familiar with the matter said.

Bankers say the company is talking about a preliminary sale figure of $1 billion. Closely held Loma Negra, which commands a 48% share of Argentina’s domestic market, could be attractive to global cement groups such as France’s Lafarge and Mexico’s Cemex SA and companies such as Portugal’s Cimpor and Brazil’s Camargo Correa and Votorantim Cimentos.  Holcim is seen as an unlikely bidder because it already controls 34% of the local market through Minetti SA, Argentina’s second-largest cement group.

JP Morgan Chase & Co. is advising Loma Negra, which is controlled by Argentina’s richest woman, Amalia Lacroze de Fortabat. Loma Negra executives couldn’t be reached for comment.

Industry executives say it could be hard for Loma Negra to get its asking price. The $1 billion price tag means the company is looking to be sold for the equivalent of nine times its estimated operating cash flow of $108 million for 2004. By comparison, the share price of Cemex, a publicly held Latin American cement giant, values that company at about seven times its 2004 operating cash flow.

Started in the 1920s by the late Alfredo Fortabat - Ms. Fortabat’s husband - Loma Negra grew through acquisitions and now has nine plants with total capacity of 7Mta. But with Argentina’s economic downturn, only 40% of the company’s capacity is currently being used.

The timing of a sale could be ripe for Cemex, where management has been trying to persuade investors about the merits of a potential new global acquisition.