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Shuangma cements big deal with giant Lafarge

Sichuan Shuangma Cement Co, controlled by the world's leading cement maker Lafarge SA, will sell new shares worth 2.8 billion yuan (US$410 million) to a unit of Lafarge for a stake in another subsidiary in China.

The deal, upon completion, will see Lafarge's indirect holding in Shenzhen-listed Shuangma rise to 80.82 percent from 56.81 percent.

Shuangma plans to sell 368 million A shares at 7.61 yuan apiece to Lafarge China Offshore Holding Co for a 50-percent stake in Dujiangyan Cement Co, it said in a stock exchange filing.

Lafarge China Offshore, which now owns 56.81 percent of Shuangma, is a wholly owned unit of Lafarge-Shui On Ltd which is a 55-45 joint venture between France's Lafarge and the Hong Kong-listed Shui On Construction and Materials Ltd. Dujiangyan Cement, 75 percent owned by Lafarge China Offshore, is a leading cement maker in Sichuan Province with an annual production capacity of 3.2 million tons.

"Driven by the Chinese government's 'Go West' economic development policy, and coupled with reconstruction following the Sichuan earthquake in May 2008, the demand for high quality cement in Sichuan Province has far exceeded supply," CLSA's unit China Euro Securities Ltd, which advised the deal, said.

As a result, Dujiangyan Cement and Shuangma are expected to be prime beneficiaries in the Sichuan market, it said.

The transaction, first announced in September and estimated to be worth about 3 billion yuan, is subject to approval by Shuangma shareholders, the China Securities Regulatory Commission and the Ministry of Commerce. Shuangma shares jumped 4.96 percent to 7.40 yuan yesterday.


 

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