FLSmidth sells Cembrit Holding A/S

FLSmidth has signed an agreement with a company in the Solix Group AB to sell all shares in Cembrit Holding A/S, one of the leading distributors and manufacturers of fibre-cement products in Europe, for DKK1.1bn (EUR147.9m).

The sale of Cembrit concludes FLSmidth's divestment of building materials companies, a process that started 10 years ago by the divestment of Aalborg Portland and Unicon.

The buyer of Cembrit is a consortium of investors headed by Solix Group AB. Solix' strategy is to retain and further develop Cembrit as the leading distributor and manufacturer of fibre-cement products in Europe.

In a statement, FLSmidth said that the Cembrit sales process was initiated in August 2012, but stalled in August 2013, “as it was not possible at the time to find the right new owner.” It was decided to postpone the sales process for a period of 3-4 years, during which time a new Board of Directors, new sales initiatives and productivity improvements would be initiated, a process currently well underway. However,  FLSmidth said it was recently approached by the Solix Group who presented an attractive unsolicited offer leading to the agreement signed yesterday.

"It's my firm belief that we on all parameters have reached a satisfactory agreement by divesting Cembrit to a new owner who wants to further develop and grow the business to the benefit of both employees and customers", says Bjarne Moltke Hansen, Group executive Vice President, FLSmidth.

The transaction is expected to close during 1Q15.

Financial consequences of the sale
The sale of Cembrit is expected to have a positive impact on FLSmidth's profit from discontinued activities in 1Q15, subject to the closing balance.

The purchase price will be paid in three tranches. The first and second tranches will be paid in the first quarter of this year, and the last tranche of DKK 125m will be paid 12 months after the closing date. 

According to IFRS accounting standards, Cembrit will be reclassified as discontinued activities in the Annual Report for 2014, and consequently, the 2014 group guidance for FLSmidth is adjusted to exclude Cembrit.

As a consequence of the exclusion of Cembrit, FLSmidth's group guidance for revenue in 2014 is technically adjusted to DKK19.5-22.5bn (previously DKK 21-24bn). The EBITA margin for the Group is still expected to be 7-9 per cent and ROCE to be 11-13 per cent. The revenue of Cembrit in 2014 is expected to be approximately DKK 1.5bn and the EBITA-margin 3-5 per cent.