Shareholders urged to back buyout of Chinea Resources Cement

Shareholders urged to back buyout of Chinea Resources Cement
23 May 2006

China Resources (Holdings) took a step closer to privatising its locally listed cement subsidiary when an independent financial adviser hired by the company recommended shareholders accept the buyout offer. 
Investment banking firm Somerley described the proposed terms for CR Cement as fair and reasonable, and recommended the board advise shareholders to accept privatization. 
Last month, CR Cement’s controlling shareholder, CRH, unveiled a HK$428 million offer to privatize the subsidiary and invest heavily in raising its fortunes, less than three years after it went public. 
“CR Cement has not been able to raise significant funds from the market and in view of keen competition and cost pressures in the building material sector, CRH has questioned the value of a listed status for CR Cement,’’ said a report filed before the Hong Kong stock exchange Monday. 
CRH, which owns a 70.7 percent interest in CR Cement, said it will pay HK$2.45 in cash per share to buy 111.73 million CR Cement shares, or the 29.3 percent stake it doesn’t own. 
Sun Hung Kai strategist Castor Pang Wai-sun called the offer reasonable and expects the conglomerate to win approval for the buyout. 
CRH intends to focus on its core retail businesses. 
Last month, CRH said it will pay up to HK$880m to privatize its loss- making electronics manufacturing unit, China Resources Logic. 
The operating environment of the building materials sector in the mainland has changed dramatically since 2004 when the government adopted measures to curb excessive fixed assets investment.
This significantly hurt profits of cement producers. CR Cement’s profit slumped 85 percent to HK$12.5 million in 2005.
CR Cement’s proposed privatization is pending shareholder approval at an extraordinary general meeting on June 15. 
Published under Cement News