Pioneer Cement backtracks on Galadari Cement acquisition

Pioneer Cement Ltd (PCL) has withdrawn its interest to buy a local cement production facility that is under construction. Abid Wahab, company secretary of PCL in a written communication to Pakistan Stock Exchange (PSX) communicated that the Memorandum of Understanding (MoU) that signed with Galadari Cement (Gulf) Ltd (GCGL) in Oct 2017 to acquire later has been terminated.

No reason was disclosed for this change of heart after more than one-and-half years since signing agreement to acquire 100 per cent stake of the company.

GCGL was incorporated in 1980 with acquisition of land at District Hub, in Baluchistan province of Pakistan, while formal construction of plant had begun during 1998. The plant's main equipment was procured from European manufacturers. However, due to legal and inheritance issues the plant experienced multiple setbacks.

Experts were of view that the primary reason for the acquisition of GCGL was to hold a strategic place in the new domestic market of the southern region to cater to upbeat cement demand (local and exports) and enjoy premium pricing. The change in mind may be due to current situation of the domestic cement industry, which is facing poor demands in local markets.