Create a free Manufacturing.net account to continue

Lafarge Pays $12.9B For Egypt's Orascom Cement

World's largest cement maker is buying Oasacom Cement, a leading player in the cement and building materials industry in the Middle East and Mediterranean basin.

PARIS (AP) — Lafarge SA, the world's largest cement maker, said Monday it is buying Egypt's Orascom Construction Industries Cement Group for about $12.9 billion, gaining access to a region that is undergoing a construction boom fed by oil profits.
 
Oasacom Cement is a leading player in the cement and building materials industry in the Middle East and Mediterranean basin including Saudi Arabia, United Arab Emirates and Turkey.
 
Lafarge, already present in 75 countries, will gain access to eight new countries including high-growth markets in Africa and Asia, Lafarge CFO Jean-Jacques Gauthier told The Associated Press.
 
In a statement Monday, Lafarge said it will also assume about $2.1 billion in debt in the deal.
 
To finance the acquisition, Lafarge will sell Orascom shareholder Nassef Sawiris an 11.4 percent stake in Lafarge for about $4.1 billion. It will also borrow about $8.8 billion.
 
Lafarge CEO Bruno Lafont told reporters at a news conference Monday that discussions began a few months ago.
 
Orascom shareholders will be asked to approve the deal in early January 2008, and Lafarge shareholders will vote on creating new shares for the Sawiris family at the end of January. The deal should be completed by the end of March, pending approval of competition authorities, the company said.
 
Consolidation in the industry began in 2001 when Lafarge bought Britain's Blue Circle Industries PLC for 4.5 billion pounds ($9.1 billion). That was followed by Cemex buying RMC Group PLC for 3 billion pounds ($6.1 billion) in 2004 and Switzerland's Holcim taking over Aggregate Industries PLC for 2.2 billion pounds ($4.5 billion) in 2005.
 
Lafarge said it expects the Orascom deal to unlock synergies — typically a combination of cost savings and extra revenues — of more than $219.7 million a year and boost earnings per share from the first year.
 
By 2010, Lafarge said it expects the majority of its profits to come from emerging markets.
 
''With this acquisition, we are not changing direction,'' Lafont said. ''We are following what we were doing on a bigger scale, and faster.''
More