Cementir looks to withdraw from Italy

Cementir has provisionally agreed terms with HeidelbergCement for the sale of its Italian cement and ready-mixed concrete operations to Italcementi, subject to such a deal not being blocked by the competition authorities.  Bearing in mind that Italcementi is the domestic market leader by a substantial margin approval may not be that easily obtained and may require some disposals to other parties.

If concluded, such a deal would make Cementir even more dependent on the Nordic and Benelux markets, which in the first half of this year represented 65 per cent of Cementir’s sales, or EUR411m. This compares with EUR88m for Italy, EUR89m for Turkey, EUR20m for Egypt, EUR31m for China and EUR17m for Malaysia.

The proposed sale of the Italian activities in 2018 are thought to provide a potential cash injection of EUR315m and roughly halve Cementir’s net debt.  Over time, a transfer of the group domicile from Italy to Denmark should not be ruled out.  

“Cementir Italia provides an ideal industrial and geographic fit that significantly improves our nationwide presence in Italy,” explains Dr Bernd Scheifele, chairman of the Managing Board of HeidelbergCement. “For Italcementi, the acquisition is a unique opportunity to grow and consolidate its position in the Italian market. We see strong recovery potential in Southern Europe and especially in Italy over the coming years. With this acquisition we are very well positioned to create value through synergies, efficient processes, and the offer of high-quality and innovative products. The acquisition is part of our strategy of disciplined growth and increasing shareholder returns.”

Cementir Italia currently has five integrated cement works and two grinding centres with a combined capacity of 5.5Mta and produced a loss of EUR5.5m in the first half of this year.  This compares with a group EBITDA 18.2 per cent ahead of EUR85m. HeidelbergCement expects annual cost savings of at least EUR25m from incorporating Cementir Italia into Italcementi.

Closing of the transaction, which is subject to final approval by the Italian Antitrust Authority, is expected in early 2018.