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HeidelbergCement acquire 45% of shares in Italcementi

Dr Bernd Scheifele

Acquisition will create global market leader in aggregates and world’s second largest cement producer

HeidelbergCement AG have entered into a stock purchase agreement with Italmobiliare SpA regarding the acquisition of a 45% shareholding in Italcementi SpA. The purchase price of €10.60 per Italcementi share represents a total purchase price of approximately €1.67 billion for the 45% stake, which will be paid in cash and up to 10.5 million HeidelbergCement shares.

The closing of the acquisition is subject to customary conditions including approval by the competition authorities, particularly in Europe and the US.

Following closing of the stake purchase, which is expected during 2016, HeidelbergCement will launch a mandatory public takeover offer to all remaining shareholders of Italcementi at a price that, as of today, is expected to be equal to €10.60 per share in cash, valuing 100% of Italcementi’s equity at €3.7 billion.

HeidelbergCement say the acquisition is a unique opportunity to accelerate their growth, adding a valuable portfolio of assets with a perfect geographical fit to the existing footprint of the Group.

Italcementi operate a portfolio of assets across 22 countries with strong market positions in France, Italy, the US and Canada, and have emerging market positions with high growth potential in India, Egypt, Morocco and Thailand. The company has extensive reserve positions in cement and aggregates, and in fiscal year 2014 generated revenues of €4.1 billion and an EBITDA of €649 million.

The combination with Italcementi will create the global market leader in aggregates, the second largest producer of cement and the global number three in ready-mixed concrete.

Dr Bernd Scheifele (pictured), chairman of the management board of HeidelbergCement, commented: ‘There is no other major Group in the industry which offers a similar complementary fit to our own operations. With the market recovery gaining traction in Southern Europe and the US, it is now the right time for us to accelerate our growth with this transaction.’

The acquisition of Italcementi will create significant potential for synergies, with HeidelbergCement targeting minimum run-rate synergies of €175 million by 2018, of which almost 30% should be delivered in 2016.

To reflect the positive impact of this transaction, HeidelbergCement are increasing their mid-term financial targets announced at the Capital Markets Day in June 2015. The Group now aims to generate more than €20 billion in Group revenue (previously €17 billion) and an operating EBITDA of more than €5 billion (previously €4 billion) by 2019.

The Group projects cumulative free cash flow of approximately €10.9 billion for the period 2015–2019, of which €1.9 billion will be utilized in the context of the announced transaction. HeidelbergCement have reiterated their commitment to reach a dividend pay-out ratio of 40–45% by fiscal year 2019.

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