HeidelbergCement Re-emerges as Global M&A Player after Italcementi Takeover
Published By : 29 Jul 2015 | Published By : QYRESEARCH
HeidelbergCement, based in Germany, has once again emerged as a worldwide player of mergers and acquisitions after taking over Italcementi for US$ 7.4 billion. The company had spent the best part of a decade trying to repair the damage it underwent after its previous major acquisition.
The company has been making painstaking efforts to rebuild its capital after the global economic crisis edged it toward the brink of bankruptcy post the US$ 12 billion acquisition in 2007 of Britain’s Hanson.
HeidelbergCement sat on the sidelines as Holcim and Lafarge planned their massive US$ 44 billion merger to bring into force the largest cement maker in the world. The German company even had to ignore the assets worth 5 billion euros that these two companies had to sell to finalize the deal.
Chief executive of HeidelbergCement Bernd Scheifele said as recently as last month that the top priority was to return the cash to their shareholders. Bernd promised to be “disciplined” about future acquisitions.
On Tuesday night, however, the company announced its agreement to purchase 45 per cent of Italcementi for 1.67 billion euros and bid for the remainder. This would create the largest player in the world in aggregates, the third largest in ready mix concrete, and the second biggest player in cement.
Scheifele emphasized on Wednesday that timing is crucial. The company bought Hanson when it was at the very top of the industry cycle. This time, however, HeidelbergCement is purchasing at the bottom of the industry cycle.
The company did a worst case scenario evaluation and came to the conclusion that the downside of the deal was rather small. The financing of the deal has been done very generously and for the long term and the company will approach the matter of deleveraging very aggressively.