LafargeHolcim Vietnam is waiting for approval from its strategic shareholder over the sale of its remaining 65 per cent stake to Thai cement producer the Siam City Cement Public Company Limited (SCCC).

“We are waiting for a response from the Vietnam Cement Industry Corporation (Vicem) before finalizing the purchase,” a representative from LafargeHolcim Vietnam told VET on November 15. “The deadline is in December, so for now all we can do is wait.”

With a holding of 35 per cent, Vicem has “first buy” power whenever LafargeHolcim Vietnam seeks strategic partners, under its strategic partnership agreement signed in 1994.

Swiss cement manufacturer the LafargeHolcim Group is planning to exit Vietnam in the fourth quarter by putting its 65 per cent holding in LafargeHolcim Vietnam up for sale. In September a written agreement was signed between LafargeHolcim Vietnam and SCCC over the stake sale.

With a market value of nearly $890 million, either Vicem and SCCC would have pay around $580 million for the 65 per cent stake. Vicem was not available for comment when contacted by VET on November 15.

Vicem is the leading cement producer in the domestic market, with a 36 per cent market share. Its latest financial statement revealed charter capital of VND13 trillion ($581.7 million) and authorized capital of VND6 trillion ($268.5 million). Despite lower growth in the cement industry last year, its pre-tax profit stood at more than VND2 trillion ($89.5 million) for 2015.

According to insiders, there are two constraints on Vicem bringing $580 million to the table. It is currently in the middle of its equitization process, which present difficulties in arranging a large amount of capital.

Complex procedures are the second constraint. As a State-owned enterprise, approvals from related ministries and authorities are required for it to participate in any big deals. Regardless, the sale of 65 per cent in LafargeHolcim Vietnam will take place before the end of the year, according to Mr. Luong Quang Khai, Chairman of Vicem.

From Switzerland, Holcim Limited last year merged with France’s Lafarge Group to form the LafargeHolcim Group, becoming the world’s largest multinational cement producer in terms of capacity.

After the merger, LafargeHolcim had five cement plants and eight ready-mixed concrete plants in Vietnam, with an annual capacity of 6 million tons of cement and 1 million cu m of concrete. It overtook the Nghi Son Cement Corporation and the Phuc Son Cement Company as the largest foreign-invested cement company in output terms.

Holcim Vietnam was founded in 1994 and now has total investment capital at $441 million. Last year it merged with Lafarge Vietnam to become LafargeHolcim Vietnam. SCCC is the second-largest cement company in Thailand. Established in 1969 it has recently embarked on a strategy of building a regional asset footprint that brings synergy in the wider region, having already established operations in Indonesia, Cambodia, Bangladesh and Sri Lanka.

With turnover of $908 million in 2015, SCCC is listed and headquartered in Bangkok, Thailand. It has two core shareholders: the Thai Group and the Ratanarak and Jardine Group, who both focus on long-term value creation and actively invest to ensure growth.

VN Economic Times