The
country’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).
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 fulfillment 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.
Dwi declined to reveal either the size of the stake his company would take in Than Long Cement nor the value of the planned transaction.
Dwi declined to reveal either 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,” Dwi 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 tons 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 tons per year in several years,” Geleximco
chairman Vu Van Tien said.
Dwi 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.
Dwi 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 it’s cash flow recorded at Rp 3 trillion.
The company, he said, also still had standby loans amounting Rp 1 trillion from
Bank Mandiri.
“Roughly the financing [for the acquisition Thang Long Cement] will be 60 percent by external loans and 40 percent by internal cash,” Ahyanizzaman said.
“Roughly the financing [for the acquisition Thang Long Cement] will be 60 percent by external loans and 40 percent 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.
Dwi 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,” Dwi 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,” Dwi said.
Semen Gresik currently has a production capacity of 23 million tons of cement per year. The company, along with its subsidiaries Semen Padang and Semen Tonasa, sold 15.96 million tons of cement during the January to September period to the domestic market, which recorded 39.47 million tons of cement consumption during
the period.
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