The total deal could rise to about RM3b due to a mandatory takeover for all the shares
By FARA AISYAH / Pic By MUHD AMIN NAHARUL
YTL Cement Bhd has proposed to acquire a 51% stake in loss-making cement manufacturer Lafarge Malaysia Bhd from Associated International Cement Ltd (AIC), for a total cash consideration of RM1.63 billion, in the largest corporate takeover in recent time.
The total deal, which could rise to about RM3.1 billion due to a mandatory takeover for all the shares, will see YTL Cement emerge as the largest cement producer in the country.
Lafarge, which has about 40% of the local cement market, posted losses of RM319.3 million last year, wider than the RM215.1 million losses recorded in 2017.
YTL Cement said it has signed an unconditional share sale agreement with AIC to acquire 433.34 million ordinary shares for RM3.75 per share.
The news of the takeover saw Lafarge shares jumping 42 sen or 12.73% to RM3.72 yesterday, three sen short of the conditional offer by YTL Cement. Lafarge has a market capitalisation of RM3.16 billion.
The subsidiary of YTL Corp Bhd will extend a mandatory takeover offer to acquire all the remaining Lafarge shares not already owned by YTL Cement.
The mandatory takeover offer will be undertaken at a cash offer price of RM3.75 for each ordinary share in Lafarge, representing a premium of approximately 19% to the five-day volume weighted average share price of RM3.15.
“The acquisition represents an opportunity for the YTL Cement group to bolster its position as a leading, home-grown, Malaysian-owned cement company, enhancing our ability to offer customers the full range of cement products, maximise the economies of scale to improve cost efficiencies and further develop our research and development (R&D) capabilities to innovate and expand the group’s range of cementitious product offerings,” said YTL Cement MD Datuk Seri Michael Yeoh Sock Siong in a statement yesterday.
“Lafarge is a strategic fit to the YTL Cement group’s business and we fully expect that the successful integration of our operations will strengthen our ability to fulfil the group’s regional growth aspirations, drive the expansion of our export markets and continue to develop our intellectual capital and R&D capability,” he added.
In an exchange filing yesterday, YTL Corp said the proposed acquisition represents an opportunity for YTL Cement and its subsidiaries to pursue its expansion strategy.
The proposed acquisition will also enable the group to expand its production capacity by gaining access to Lafarge’s existing plants and facilities.
In addition, the takeover will place YTL Cement in a better position to align Lafarge’s future strategy and business direction with its business objectives to fully realise the benefits anticipated from the exercise.
While the board has taken note of the current financial performance of the Lafarge group, the board are also informed of the potential synergies and prospects of the Lafarge group.
YTL Corp closed five sen or 4.42% higher at RM1.18 yesterday, giving it a market capitalisation of RM12.47 billion.