Kosmos Cement Co in Kentucky, USA, a joint venture between Cemex and Buzzi Unicem, has signed an agreement for the sale of certain assets to Eagle Materials. The US$665m transaction is expected to close in the 1Q20 following regulatory approvals.
The assets being divested consist of the 1.7Mta cement plant in Louisville and seven distribution terminals as well as raw material reserves. The net proceeds obtained from this transaction will be distributed to Cemex and Buzzi Unicem in line with their ownership stakes of 75 per cent and 25 per cent, respectivley.
The acquisition will increase Eagle Cement Materials Inc's US capacity by 25 per cent. Michael Haack, Eagle Materials Inc, president and CEO, said the agreement represents a significant milestone in the company's growth strategy. "At Eagle we have been disciplined in the strategic growth of our integrated network of cement plants in the US heartland, and the Kosmos facilities are a natural fit. The Kosmos facilities are high-quality, low-cost assets that align with our long-term strategic growth plans and meet our criteria for new investment. These assets will also enable us to participate more significantly in US construction and infrastructure market growth."
Mike Nicolais, Eagle Materials board chairman, added, "This acquisition is an exceptional geographic fit with our existing system of heartland-US cement assets. It not only extends our reach in key US markets, but also enhances the near and long-term cash flow generation capabilities of our businesses. Also this acquisition is especially timely in light of our previously announced plans to separate our Heavy Materials and Light Materials businesses into two independent, publicly traded corporations. Moreover, this investment reflects the balanced approach Eagle takes in capital allocation between profitable growth and the return of capital to shareholders, and combined with the more than US$320m of capital we returned to shareholders in the first half of the year, it reflects the strong cash flow generation capabilities of our businesses."
