Cementos Argos combines its operations in the US with Summit Materials

The resulting combined entity will be a leading construction materials company, operating at a large scale, with national scope in the US.

Summit Materials expects at least US$100 million of EBITDA to be generated annually, with significant materialisation over the course of two years, as a result of synergies derived from operational efficiencies and combined services.

Juan Esteban Calle, CEO of Cementos Argos, stated: “The combination with Summit Materials, which had the resounding support of its shareholders, allows us to start a new chapter in the successful story of our presence in the United States and is built on shared values, strategic vision and complementary capabilities. This new milestone consolidates our goal of continuing to expand our exposure within the building materials industry."

Upon completion of the transaction, Cementos Argos will receive US$1.2 billion in cash, subject to customary adjustments for this type of transaction, and approximately US$54.7 million worth of Summit Materials' shares. This is equivalent to a 31% stake in the combined entity, which was valued at around US$2 billion, based on closing stock prices from Summit on 11 January 2024 for US$36.66. Therefore, the total valuation of Argos USA will stand at US$3.2 billion.

Considering the book value of these assets and the accounting principles, Cementos Argos will record in its financial statements a gain on sale of approximately US$1.2 billion during the first quarter of 2024, impacting the company's net profit via discontinued operations.

Through a series of complementary contracts with Summit, Cementos Argos is strategically positioned to supply cement, license intellectual property and optimise a strong logistics network. Among other collaborations with the combined entity, this adds to a solid capital structure with a decrease in debt of approximately 70%. This positions Argos favourably to execute its value generation strategy in all operating locations: Colombia, Central America and the Caribbean.

Jorge Mario Velásquez, President of Cementos Argos' Board of Directors, stated: “We are pleased to announce this new partnership with Summit Materials and to create value for all of Cementos Argos' shareholders. With the closing of this transaction, Cementos Argos will acquire a strategic ownership in a leading company in the materials industry, with a national presence in the largest market in the world, improving its capital structures for future growth in other locations. Since the announcement of the transaction, we have seen a valuation of more than double the price per share of Cementos Argos, which reflects the strategic importance of this transaction.”

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