LafargeHolcim has signed an agreement with YTL Cement Bhd for the divestment of its entire 51 per cent stake in Lafarge Malaysia Bhd for a consideration of US$396m, fully payable in cash, corresponding to MYR 3.75 per share. This price represents a premium of 43 per cent compared to the last 90 days trading period of Lafarge Malaysia Berhad on the Malaysian stock exchange, according to a company statement.
Lafarge Malaysia Bhd operates three integrated cement and two grinding plants with a total capacity of 14.65Mta, according to The Global Cement Report. With the divestment, LafargeHolcim will fully exit the Malaysian market.
YTL Cement Bhd is part of Malaysian infrastructure conglomerate YTL Corp Bhd, which is mainly active in cement production, construction, property development and utilities. It currently operates 7.95Mta capacity in Malaysia across two integrated plants and two grinding stations.
Futhermore, LafargeHolcim has signed an agreement with YTL Cement Singapore PTE Ltd for the divestment of its entire 91 per cent shareholding in Holcim Singapore Ltd.
The proceeds of both transactions will allow LafargeHolcim to further improve its debt ratio by approximately 0.1 time, contributing to reach its target ratio of net debt to recurring EBITDA of ≤2 times by the end of 2019.
Jan Jenisch, CEO, said: “As part of our Strategy 2022 – ‘Building for Growth’ we have committed to divestments in order to deleverage and to further strengthen our balance sheet. The proceeds from this transaction will further improve our debt ratios with the target of 2 times Net Debt to Recurring EBITDA by the end of this business year.”
Closing of the transaction is subject to customary approvals but is expected within 2Q19.
In recent years, due to muted demand and ongoing price wars Malaysia has been a challenging market for LafargeHolcim and market analysts Bernstein expects a slightly positive stock reaction to the divestment news.
