DMCI eyes entry into cement business
The Consunji Group is looking to diversify into a new industries, with the cement business among those being considered through a potential acquisition of Cemex Holdings Philippines (CHP).
“The company continues to evaluate several opportunities to expand into new verticals such as the cement business,” DMCI Holdings told the Philippine Stock Exchange yesterday.
DMCI, however, said it “does not have any knowledge on a definitive transaction in this space at this time.”
Sought for further comment on the possible acquisition of CHP, DMCI chairman Isidro Consunji in a mobile message said he “cannot comment at the moment.”
A source with direct knowledge of the matter, meanwhile, confirmed ongoing talks between DMCI and CHP for a potential acquisition.
“There’s discussion. Nothing formal. No board approval. They’re looking at the numbers,” the source said.
“Cemex really wanted to sell. So they are really exiting, and this group (DMCI) is interested,” the source added.
If things fall in place, the source said the transaction could be completed within the first half of the year.
Reuters, quoting an unnamed source, said the acquisition of CHP “could be worth around P40 billion ($715 million), based on Cemex Philippines’ book value of P3 per share.” This would be double CHP’s current share price and market value, it said.
CHP is an indirect subsidiary of global construction materials company Cemex, S.A.B. de C.V., a global construction materials company.
The company produces and markets cement and other building materials in the Philippines.
Its Island and Rizal cement product brands are sold in Luzon, while the APO brand is sold in Visayas and Mindanao.
DMCI, meanwhile, has a diversified investment consisting of construction, real estate, coal and nickel mining, power generation, and water distribution.
“It makes sense for them to look at Cemex as it would be an opportunity for vertical integration given that cement is a key input in some of DMCI’s major businesses,” China Bank Capital Corp. managing director Juan Paolo Colet said.
“If the deal pushes through, it would be an opportunity for Cemex shareholders to exit and for the parent of Cemex to focus on other markets,” he said.
Claire Alviar of Philstocks Financial also believes the deal, should it materializes, would be mutually advantageous for both companies.
“DMCI may benefit from a vertical expansion, which could help in managing the costs of its property arm. Simultaneously, CHP could benefit from DMCI’s development projects and potentially increase its capacity with additional capital from DMCI,” Alviar said.