HeidelbergCement set to buy Italcementi for $4bn30 July 2015 | By GCR Staff
The process of consolidation in the European building materials industry has continued with the announcement that HeidelbergCement is to purchase a 45% stake in Italcementi for $1.8bn.
“Italcementi is expected significantly to add to our free cash flow and we are upgrading our mid-term financial targets for 2019 to reflect the positive impact of the transaction”– Lorenz Näger, HeidelbergCement CFO
The stake is owned by Italmobiliare, an investment company with holdings in a number of industrial sectors. The deal values Italcementi at $4bn.
Once the bid is finalised next year, Heidelberg will offer to buy out Italcementi’s remaining shareholders. If it is successful, it will create the world’s largest aggregates company, the second largest cement supplier and the third largest ready-mixed concrete maker.
Heidelberg said in a statement that the acquisition would “add a valuable portfolio of assets with a perfect geographical fit to the existing footprint of the group”.
Bernd Scheifele (pictured), the chief executive of Heidelberg, said: “We believe we’re paying a fair price for high-quality assets when taking into account the potential in recovering core markets and the value that can be unlocked by applying industry-leading optimisation programmes in the context of a larger platform.”
Lorenz Näger, Heidelberg’s chief finance officer, added: “After closing the transaction, our goal is to deliver annual run-rate synergies of $190m by 2018.
"Italcementi is expected significantly to add to our free cash flow and we are upgrading our mid-term financial targets for 2019 to reflect the positive impact of the transaction.”
The acquisition will be initially financed through cash and a bridge loan worth $4.8bn provided by Deutsche Bank and Morgan Stanley.
Italcementi is the 5th largest cement producer in the world and the biggest in the Mediterranean area.