Korean PEF in talks to buy Lafarge Halla Cement

Lafarge Halla Cement Corp., Korea’s fifth largest cement manufacturer, will likely be sold to Glenwood Private Equity, a home-grown Korean investment company, for up to 600 billion won ($496.5 million).

The private equity fund is in talks to buy the cement company in cooperation with Eugene Group, the country’s largest ready-mixed concrete manufacturer, and Sungshin Cement, another Korean cement maker.

According to sources on Wednesday, LafargeHolcim Ltd., the majority shareholder of Lafarge Halla Cement, recently named Glenwood Private Equity as a preferred bidder for the cement business.

The deal is estimated to be valued at somewhere between 500 billion won to 600 billion won, fairly attractive to potential investors, given previous deals involving the sale of Tongyang Cement & Energy and Ssangyong Cement Industry hovered around 800 billion won.

The deal, if realized, would alter the competitive landscape in the local cement market. Lafarge Halla Cement represents 12.14 percent of the market, very close to the fourth place claimed by Tongyang Cement & Energy with 12.77 percent. It could also send Sungshin Cement to the top spot, beating the industry’s No. 1 player Ssangyong Cement Industry Co. which accounts for 19.80 percent.

Lafarge Halla Cement and Sungshin Cement could also create synergies as the former runs plants mostly on coastal areas and the latter has a production and marketing network inland.

Glenwood Private Equity rose to fame after its high-profile bid for Tongyang Magic in 2014.

Switzerland-based LafargeHolcim, the world’s largest building materials manufacturer, was created after the merger between French Lafarge and Swiss Holcim. LafargeHolcim has reportedly decided to sell Lafarge Halla Cement and other non-core assets to improve its financial health.

Lafarge Halla Cement was acquired by French Lafarge in 2000 and is wholly owned by LafargeHolcim. Lafarge Halla Cement recorded 445.1 billion won in sales and 36.4 billion won in operating income in 2014. Its annual production capacity is 11,216 tons of cement.

Eugene Group and Sungshin Cement have good reasons to accept the offer from Glenwood Private Equity. Eugene Group would be able to secure a stable supply of cements for its business. Eugene Group also wants to keep its rival Sampyo Group from running ahead of the pack after Sampyo’s recent acquisition of Tongyang Cement & Energy.

Sungshin Cement could boost its market presence if it takes part in the deal.

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