Sungshin Cement to buy out bigger Halla Encom to build economies of scale

Sungshin Cement`s Danyang plant. [Photo provided by Sungshin Cement Co.]

South Korea’s Sungshin Cement Co. will become the new owner of bigger rival Halla Encom Corp., a ready-mixed concreate (RMC) manufacturer under Halla Group, by purchasing an 85 percent stake in for 55.6 billion won ($49.3 million).

Sungshin Cement announced Wednesday that it signed a share purchase agreement by forming a consortium with BCH Peregrine Investment, a private equity fund, to take over Halla Encom from Halla Group. Halla Corp. said in a disclosure that the purpose of the sale is to improve financial soundness and raise fund for new businesses.

On Thursday, shares of Sungshin Cement rose 2.42 percent to finish the day at 10,600 won.

Halla Encom ranked 7th last year with shipment reaching 3.44 million cubic meters(㎥) while Sungshin Cement ranked at the bottom among total eight RMC makers in the nation with shipment of 1.91 million ㎥. Industry watchers believe the acquisition would make Sungshin Cement ascend to the third largest RMC producer by beating Ssangyong Remicon Co. that shipped 5.34㎥ RMC last year, following Sampyo Industry with 7.59 million ㎥ and Eugene Corp. with 7.5 million ㎥.

Sungshin Cement ranked fourth in the cement business among total five companies last year with output reaching 7.38 million tons.

Sungshin Cement last year joined a buyout race for Halla Cement but lost to Asia Cement. The share of Asia Cement jumped to 20 percent from 7 percent, the smallest in the industry, after the acquisition, placing the company on par with market leaders Hanil Cement and Ssangyong Cement Industrial.

[ⓒ Maeil Business Newspaper & mk.co.kr, All rights reserved]