Birlas eye Latam assets of Cemex, Votorantim Cimentos

by Dave

In Brazil, the two most important
cement players are Camargo Correa Group with a 33% market share and Votorantim with a
30%. Both are strong and very unlikely to be outright sellers. As an example, they acquired a
controlling interest in Cimpor (Portugal
cement company) competing also with another brazilian group, steel company CSN.
The Transaction was closed in favour of Camargo & Votorantim and now both hold 33%
& 21% respectively, deal of about € 4,bn. This was a very big transaction in late 2009/early 2010. The cement market in Brazil exceeds 55
million tons with a growing demand sustained by projected infrastructure spending for World Cup 2014 and Olympics 2016. In Brazil, for an Indian company, the strategy could be to
find a niche or regional cement player (say in the North East)
that would justify the risk to enter a
market dominated by these two giants.

Another play would be in
the industries related to the cement, like developers, construction companies, service
providers or suppliers. Here there are many more opportunities.

The Economic Times

Diversified Indian conglomerate Aditya Birla Group may make an offer to buy certain Latin American assets of one of the world’s largest cement companies, Mexico’s Cemex, atleast four people said on condition of anonymity. The Birla’s are also in talks with Brazilian industrial giant Votorantim Group to buy some of their assets located in South America, according to two of the people quoted above.

An acquisition could cost Birla Group flagship UltraTech cements in excess of $1 billion.

Cemex has plants in several Latin American countries including Argentina, Colombia, Costa Rica, Mexico, Nicaragua, Panama and Puerto Rico and posted sales of $14.07 billion for the year ended December 31st 2010. The company has operations in more than 50 countries and the capacity to produce 96 million Metric Tonnes (MT) of cement annually.

Votorantim Cimentos, the cement division of the Brazilian conglomerate, has more than 30 cement plants in Brazil and is the market leader there.
The company also owns a 21% stake in Portuguese cement major Cimpor which also has assets in Latin American countries.