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Cementos Argos to acquire cement plant and eight cement terminals

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World Cement,

Cementos Argos continues to consolidate its internationalisation strategy, once it acquires a new cement plant and eight cement terminals in the United States from HeidelbergCement, which will increase its installed capacity by 2.2 million t of cement and 1.6 million tpy of clinker.

“This acquisition strengthens our internationalisation and market diversification strategy, and it leverages our presence in the United States, allowing us to create operational and logistic synergies thanks to the proximity of this new plant to our other markets. Additionally, it facilitates our ability to share knowledge about strategic principles for our company, such as energy efficiency and the use of alternative fuels,” explains Juan Esteban Calle, CEO of Cementos Argos.

Once finalised, the purchase of this plant will reaffirm Cementos Argos as the largest Colombian investor in the United States with its acquisitions carried out between 2005 and 2014, of companies such as Ready Mixed Concrete Company and Southern Star Concrete, as well as the asset acquisitions from Lafarge and Vulcan Materials Company, which, together, exceeds more than US$2.2 billion.

"This acquisition is of the utmost importance for Cementos Argos’ shareholders, as it further strengthens our cement subsidiary’s competitive position in the US market, one of the fastest-growing worldwide. Higher exposure to the US market, together with synergies in the operating network that the company will have in this country, and the fact that the transaction can be financed to a great extent through divestment of non-strategic assets, make this a value-creating transaction for all shareholders, including Grupo Argos, its holding company,” adds Jorge Mario Velásquez, Chairman of the company’s board of directors and CEO of Grupo Argos.

Some of the most important aspects of this asset acquisition for Argos are:

  • It is a profitable operation that could generate annual revenues of close to US$200 million once its numbers are consolidated with Argos’ operations in the US in 2017.
  • Argos expects attractive growth in this new market as it increases its utilisation of the plant’s installed capacity alongside the recovery seen in the US market.
  • It strengthens the company’s logistics network with the eight cement terminals located close to important urban areas, four of which have maritime access and four of which have railroad access.
  • It is a modern plant that does not require high capital investments in the short or medium term.
  • It allows the company to supply new and demanding markets with outstanding consumption-per-capita rates, in states such as New York, New Jersey, Maryland, among others, as well as in Washington D.C.
  • The transaction includes mining operations with reserves of more than 50 years.

Finally, it should be noted that Argos does not foresee a significant increase in its indicators of current indebtedness. The company will finance the transaction mainly through divestments and, in the meantime, with a bridge credit from J.P. Morgan, who also acted as Argos’ financial advisor for this transaction.

Adapted from press release by Joseph Green

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