YTL buys rival Lafarge Malaysia

 Corporate News
 Friday, 3 May 2019

“The acquisition represents an opportunity for YTL Cement to bolster its position as a leading,
home-grown, Malaysian-owned cement company, enhancing our ability to offer customers the
full range of cement products, maximise economies of scale to improve cost efficiencies and
further develop our research and development (R&D) capabilities to innovate and expand the
company’s range of cementitious product offerings,” YTL Cement managing director Datuk Seri
Michael Yeoh Sock Siong said

PETALING JAYA: In a corporate move that will see further consolidation of the local cement
industry, YTL Corp Bhd has sealed a deal to acquire LafargeHolcim’s entire 51% stake in
Lafarge Malaysia Bhd (LMB) for US$396mil (RM1.625bil).

The acquisition will be carried out via YTL’s unit – YTL Cement Bhd – and will subsequently
see Swiss-based LafargeHolcim exiting the Malaysian building material scene completely. The
takeover will also see YTL shaping up to be the largest cement company in Malaysia.

LafargeHolcim said in its website that it has also signed an agreement with YTL Cement
Singapore Pte Ltd for the divestment of its entire 91% shareholding in Holcim Singapore Ltd.

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The acquisition of the 51% stake in LMB is priced at RM3.75 per LMB share for 433.34 million
shares.

“The acquisition represents an opportunity for YTL Cement to bolster its position as a leading,
home-grown, Malaysian-owned cement company, enhancing our ability to offer customers the
full range of cement products, maximise economies of scale to improve cost efficiencies and
further develop our research and development (R&D) capabilities to innovate and expand the
company’s range of cementitious product offerings,” YTL Cement managing director Datuk Seri
Michael Yeoh Sock Siong said in a statement.

“LMB is a strategic fit to YTL Cement’s business and we fully expect that the successful
integration of our operations would strengthen our ability to fulfil the company’s regional growth
aspirations, drive the expansion of our export markets and continue to develop our intellectual
capital and R&D capability,” he added.

The price values LMB at a 43% premium to the last 90-day trading period. The stock was last
traded at RM3.25 at the midday break on Thursday.

LMB’s shares climbed to near-takeover offer price of RM3.72 after the corporate proposals were
announced to the stock exchange yesterday.

They ended the day higher by 42 sen or 12.73%, with 16.94 million shares changing
hands.LafargeHolcim said it expects to complete the disposals within the second quarter of this
year.

LMB operates three integrated cement and two grinding plants, LafargeHolcim said.

Post-acquisition, YTL Cement said it would hold a 51% stake in LMB. Consequently, in
accordance with the listing rules, YTL Cement has also extended a mandatory takeover offer to
acquire all the remaining LMB shares it does not own. YTL Cement said in its Bursa Malaysia
announcement that it intends to maintain the listing status of LMB on Bursa Malaysia, unless it
receives valid acceptances resulting in the company and its associates holding 90% or more
LMB shares pursuant to this corporate action, and LMB does not comply with the public
shareholding spread requirements under the listing rules.

The takeover of both LafargeHolcim’s 51% stake and the probable mandatory takeover offer will
be funded through a combination of internally generated funds and bank borrowings, YTL said.

It added that the acquisition is expected to complement its existing core business activities and
deliver synergies, including operational efficiencies in logistics, distribution and procurement, as
well as cost synergies realised from economies of scale, the reduction or elimination of
duplicated functions, and the consolidation of corporate overheads.

LafargeHolcim said the divestment of both the Malaysian and Singaporean operations would
allow for it to further improve its debt ratio by approximately 0.1 times, as it aims to reach its

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target ratio of net debt-to-recurring earnings before interest, taxes, depreciation and amortisation
of two times or less by end-2019.

Amid the strong competition in the industry, LMB has been suffering a bout of losses in the past
two financial years.

In financial year 2017 (FY17), it recorded a net loss of RM213.59mil, while in FY18, the
company’s net losses widened to RM318.87mil.

LMB’s equity had also lowered by RM512.83mil from the end of FY16 to the end of FY18,
according to financial information posted on its website. Net gearing ratio had risen slightly to
0.3 times at the end of FY18 from 0.05 times at the end of FY16.

Read more at https://www.thestar.com.my/business/business-news/2019/05/03/ytl-buys-rival-

lafarge-malaysia/#QLh2jgiVlCIUPIGM.99