ASIA NEWS NETWORK

WE KNOW ASIA BETTER



» Business

Indonesia cement giant acquires Vietnam firm, eyes Myanmar

Publication Date : 16-11-2012

 

Indonesia's largest cement producer PT Semen Gresik has entered into a deal to acquire a majority stake in a cement producer in Vietnam and is considering a similar move in Myanmar as part of the company's regional cement market expansion plans.

Semen Gresik signed on Wednesday a conditional sale and purchase agreement for the acquisition of Thang Long Cement from one of the current shareholders, Hanoi General Export-Import Joint Stock Company (Geleximco).

"The planned transaction will depend on the fulfilment of requirements agreed by Semen Gresik and Geleximco. The transaction is expected to be closed this December," Semen Gresik president director Dwi Soetjipto said after the agreement-signing ceremony.

Soetjipto declined to reveal neither the size of the stake his company would take in Than Long Cement nor the value of the planned transaction.

"We will be a majority shareholder. That's all I can say now," Soetjipto said.

Thang Long Cement is one of the many cement companies operating in Vietnam and currently owns a cement plant in Quang Ninh province and a grinding station in Hiep Phuoc Industrial Park, Ho Chi Minh City. Thang Long Cement has a production capacity of 2.3 million tonnes of cement per year.

Thang Long Cement also has secured two licenses to develop new factories in Quang Ninh province and Binh Phuoc province.

"We are very excited to begin cooperation with a prominent cement maker in Indonesia such as Semen Gresik. We will back two new cement plants to bring the total production capacity to 6.5 million tonnes per year in several years," Geleximco chairman Vu Van Tien said.

Soetjipto said that Semen Gresik would also study Thang Long Cement's plan to establish new plants to increase its production and grab a bigger share in Vietnam's cement market.

Semen Gresik said that it would finance the acquisition of Thang Long Cement with its internal cash and external funding.

Semen Gresik finance director Ahyanizzaman cited that the company was currently in an excellent financial condition with its cash flow recorded at 3 trillion rupiah (US$311 million). The company, he said, also still had standby loans amounting 1 trillion rupiah from Bank Mandiri.

"Roughly the financing [for the acquisition Thang Long Cement] will be 60 per cent by external loans and 40 per cent by internal cash," Ahyanizzaman said.

In addition to its plans to acquire Thang Long Cement in Vietnam, Semen Gresik is seeking partners to enter the Myanmar market.

Soetjipto said that Semen Gresik was in talks with two private companies in Myanmar about the possibility of establishing joint ventures. "Semen Gresik will be the majority shareholders," Soetjipto said.

Entering Vietnam and Myanmar is part of Semen Gresik's effort to establish itself in the regional market. "This is a strategic action, not only to strengthen our market shares but also to anticipate the Asean free trade area," Soetjipto said.

Semen Gresik currently has a production capacity of 23 million tonnes of cement per year. The company, along with its subsidiaries Semen Padang and Semen Tonasa, sold 15.96 million tonnes of cement during the January to September period to the domestic market, which recorded 39.47 million tonnes of cement consumption during the period.

 

Mobile Apps Newsletters ANN on You Tube