Lafarge Malaysia BHD has announced that it is buying the entire stake in Holcim (Malaysia) Sdn Bhd from Holcim Indonesia Tbk for Rm.330 million. This represents a regional integration, following the merger of the two parent companies in July.
The move will increase the annual installed production capacity of the cement plants by 9.2%, from 12.95 million t to 14.14 million t, and will hopefully strengthen its value chain in the distribution channel and raw materials from an existing quarry in Johor, as well as increasing the distribution channel in Malaysia and potentially Indonesia, in order to facilitate a better profit margin profile in total product sales. The merger is also expected to deliver synergies in operations, costs and capital expenditure.
However, there are mixed opinions on the acquisition. While MIDF Research expects it to enhance local and regional production capacities, the RHB Research Institute instead cautions the decision. According to the company, this is due to weaker construction activities in the local scene that may affect financial performance, and the likelihood that the potential synergies will require a certain period of time to be achieved.
LMB expects the deal to be complete by 4Q15, following an EGM.
Edited from various sources by Rebecca Bowden