Glenwood PE to acquire Lafarge Halla

Glenwood PE to acquire Lafarge Halla
Published: 18 March 2016


South Korea’s Glenwood Private Equity (PE) has inked a deal to acquire Lafarge Halla Cement Corp. from LafargeHolcim Ltd. for about KRW630bn (US$542m), said the company Thursday.

LafargeHolcim said it expects to close the sale of Lafarge Halla, Korea’s fifth-largest cement producer, in the 2Q16, subject to final approvals.

The sale follows several other ownership changes in the South Korean cement market as producers battle with slack cement demand resulting in some companies relying on banks to become their major shareholders after they failed to repay their debts. The trend is now swinging to purchases by private equity companies who are taking ownership from the creditors.

In August 2015 Sampyo Cement and KBD Private Equity bought a 55 per cent stake in Tongyang Cement & Energy, Korea;s fourth largest cement manufacturer for KRW290bn after the company had been in receivership since December 2013.

December 2015 then saw Korean private equity firm Hahn & Co buy 46.14 per cent of Ssangyopng Cement Industrial for US$683m after Ssangyong’s bank creditors led by Korea Development Bank sold its  shares. Hahn previously acquired Daehan Cement in a bankruptcy court-overseen process in 2012.

Hyundai Cement is considered to be the next company to be bought as it fell into receivership in 2010 after also being unable to repay its debts. In 2014 Hana Bank, KDB, Korea Exchange Bank, and Woori Investment & Securities took major shares in the business.

Korea’s cement industry has recently been hit by allegations of price-fixing too. In January, the country’s Fair Trade Commission reportedly fined six manufacturers KRW199.4bn (US$167.7m) for fixing the price of cement, which rose by 43 per cnet to W66,000/t in April, 2012 from KRW46,000/t in March, 2011. The companies fined were Ssangyong, Tongyang Cement & Energy, Hanil Cement, Sungshin Cement, Hyundai Cement and Asia Cement.

LafargeHolcim’s decision to sell its Korean unit is part of a broader group strategy to divest CHF3.5bn of assets. In its annual report, in which it reported a fourth-quarter loss of CHF2.86bn, the company said it had so far reached about one-third of this eventual goal.