JAKARTA (TheInsiderStories) – Japan’ Taiheiyo Cement Corp., signed a shares agreement with local firm, PT Solusi Bangun Indonesia Tbk (IDX: SMCB) and PT Semen Indonesia Industri Bangunan, with values US$220 million, the management announced today (01/27). In April 21, 2020, the parent, PT Semen Indonesia Tbk (IDX: SMGR), has agreed to sold 15 percent shares to of the unit to the investor.
President Director of Solusi Bangun Indonesia, Aulia Mulki Oemar, said the equity participation through the issuance of new shares by the unit. Along with Taiheiyo Cement’ investment plan, both parties also signed an off-taker agreement in order to increase the utilization of the cement plant.
“This is a realization of the initial agreement to carry out strategic cooperation between the parties through a partnership agreement,” he noted.
After the acquisition the ownerships of Semen Industri Bangun in Solusi Bangun will decreased from 98.31 percent to 83.31 percent and public 1.69 percent. For background, on Jan. 31, 2019, Semen Indonesia had purchased 80.64 percent of PT Holcim Indonesia Tbk shares owned by Holderfin B.V., The Netherlands with an acquisition value of $916,93 million.
The assets has been sold to the state-owned cement producer include the entirety of Switzerland’ LafargeHolcim Ltd., operations in Indonesia, which consists of four cement plants, 33 ready-mix plants and 2 aggregate quarries. For years, the company has suffered from overcapacity and price pressure, placing pressure on profit margins.
Nevertheless, the long-term potential of the market and the company’ strong market position make this a significant and surprising move. While for Semen Indonesia, strengthened its domestic footprint through the acquisition of the third largest cement company in the country, with four cement plants with capacity of 14.8 metric ton (MT) of cement per annum capacity and 30 ready-mix plants.
Furthermore, it said, the acquisition will provide the producer with a significantly larger capacity and broader product portfolio and geographical footprint to fully capitalize on these tremendous growth opportunities in the domestic market.
The transaction will also strengthen cement industry resilience in Indonesia. Currently, there are 15 cement companies in Indonesia with total installed capacity if 107 metric tones per annum, whereby 63 percent capacity share is owned by private and foreign players.
Solusi Bangun established in 1971 and has four cement plants located in Lhok Nga (Aceh), Cibinong (West Java), Cilacap (Central Java), and Tuban (East Java) and distribution terminals in Sumatera and Kalimantan. While, its holding, Semen Indonesia was established in 1957 in Gresik, Indonesia.
In 1995, Semen Indonesia consolidated with PT Semen Padang and PT Semen Tonasa and was known as Semen Gresik Group. The company become publicly listed on the Indonesia Stock Exchange since 1991. 51 percent of the shares are owned by the government and the remaining 49 percent.
The acquirer, Taiheiyo Cement established since 1881 and operates globally, focusing on cement, mineral resources, environmental, and international businesses. The company has nine production sites in Japan, three in the United States, three in China, one in Vietnam and Philippines.