Orascom Construction Inds, SAE New JV in Spain
OCI acquires 50 per cent stake in largest independent aggregates and ready-mix concrete producer in Spain
Orascom Construction Industries announced that it has acquired a 50 per cent stake in Group GLA (GrupoGLA), the largest independent aggregates and ready-mix concrete producer in Spain. The Group was founded by the prominent Monje Tunon family who will continue to be joint venture partners in the business. Group GLA has operations in aggregates and ready-mix concrete throughout Spain with a focus on the Madrid and Valencia markets. The Company also has operations in mortar and pre-cast concrete production and application.
OCI has acquired Group GLA shares for a total cash consideration of €51.3m and contributed its 59 per cent stake in its subsidiary Cimentos La Parilla (CLP), the Spanish owner and operator of a clinker grinding plant located north of Madrid acquired in late 2005, to arrive at its 50 per cent stake. The new joint venture partners have committed to an immediate capital increase of €40m.
Group GLA has an annual quarrying capacity of around 5Mt of aggregates on the back of more than 240Mt worth of reserves spread over 11 quarries throughout Spain. The Group has an annual production capacity of 3.5Mm3 of ready-mix concrete. The new joint venture will also now control and operate 1.5Mt of clinker grinding capacity in two locations north and south of Madrid respectively which will result in significant synergies. Group GLA generated revenue of €84m with an EBITDA of €10m during the first half of 2006.
OCI Chief Executive Officer, Nassef Sawiris commented "Spain is the largest cement consumer in Europe and continues to be one of the world’s largest importers of cement with an annual supply deficit of around 10Mt. Our new investment in Spain is a continuation of our long-term strategy to enhance our presence in markets suffering from structural cement supply deficits and further affirms our view on the increased significance of aggregates reserves and distribution in these markets. Going forward, the combined clinker grinding plants which require up to 1.5Mta of clinker will serve to alleviate the rising supply deficits in Spain and surrounding markets. The new consolidated entity is expected to generate revenue in excess of €250m per year providing a solid platform for future consolidation activity. During the past years, our new partners in Spain have demonstrated a strong track record in generating growth and identifying new investment opportunities. With €40m in capital increase proceeds earmarked for investment, the new joint venture will be well positioned to act as a potential catalyst for further consolidation in the aggregates and ready-mix concrete sector."
