Heidelberg's European bet

Published 22 October 2015

Following the completion of the LafargeHolcim merger in mid-July, less than a fortnight later, HeidelbergCement announced its intention to buy Italcementi. The acquisition would consolidate HeidelbergCement’s no 2 position in the cement industry and regain its market leadership in the aggregates sector. ICR examines the drivers behind this latest M&A activity in the cement industry.

With the Italcementi acquisition, HeidelbergCement takes a punt at the forecast Mediterranean recovery

(Pictured: Tourah cement works, Egypt)

The two-phase acquisition process will first see HeidelbergCement buy Italmobiliare’s 45 per cent stake in Italcementi with a combination of shares and cash. Following approval by regulatory authorities, all remaining shareholders will receive a mandatory offer of around EUR10.60/share. This values Italcementi at around EUR7.8bn.

The purchase will be financed via a EUR4.4bn bridge loan, part of which would be paid back with the EUR1bn cash proceeds from non-core and anti-trust related assets. However, the increased indebtness is expected to delay any recent deleveraging by HeidelbergCement.

The transaction is expected to close in 2H16 subject to antitrust approvals, notably in Europe and the US.

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