EU regulator grants conditional approval to HeidelbergCement-Italcementi's $4.1-bn merger
30 May 2016
The European regulator has approved Germany's HeidelbergCement AG's proposed acquisition of its Italian rival Italcementi SpA for €3.7 billion ($4.1 billion) with conditions.
The European Commission (EC) cleared the acquisition on condition that that HeidelbergCement sells Italcementi's entire business in Belgium.
The divestment includes all of Italcementi's cement, ready-mix and aggregates assets in Belgium, its stake in an existing limestone joint venture with LafargeHolcim, as well as a portion of HeidelbergCement's limestone quarry in Antoing provided in exchange for a portion of Italcementi's Barry quarry, which will be retained by HeidelbergCement.
Margrethe Vestager, the head of antitrust policy at the EC said, "Competitive markets for cement and concrete are essential for the EU's construction sector. I welcome the proposed commitments as they will ensure that HeidelbergCement's multi-billion euro takeover of Italcementi will not harm effective competition."
Since both companies' operations have substantial overlaps in Belgium and its neighbouring regions with combined market shares above 50 per cent, the EC had concerns that the merged entity would face insufficient competition from the remaining players and that the takeover would have led to higher prices for cement and ready-mix concrete in the area.
The EC said that HeidelbergCement's commitment to divest Italcementi's business in Belgium addresses these concerns.
In July last year, HeidelbergCement, the world's second-biggest cement maker, struck a deal to buy rival Italcementi for €3.7 billion, its biggest acquisition since it purchased Britain's Hanson Plc in 2009 for £7.9 billion.
HeidelbergCement offered to buy Italmobiliare SpA's 45 per cent stake in Italcementi for €10.6 per share in stock and cash, or a total of €1.67 billion, and then offer the same price for each share held by outstanding investors.
HeidelbergCement is active in Northern, Western and Central Europe whereas Italcementi focuses on Southern Europe, operating cement facilities in Italy, France, Spain and Greece. Italcementi is also active in Belgium and Bulgaria.
HeidelbergCement operates two cement production sites in Belgium as well as three production sites in the Netherlands. Italcementi operates one cement production site in Belgium, which also serves customers in France and the Netherlands, as well as several production sites in France.
The EC had concerns that the remaining suppliers in these markets would be unable to exercise a sufficient competitive constraint on the merged entity and thus to avoid price rises for grey cement and ready-mix concrete.
''We are very pleased with the positive decision of the European Commission'', said Dr. Bernd Scheifele, chairman of HeidelbergCement. ''This decision is an important milestone on our way to the full acquisition of Italcementi.''
With annual revenues of €13.5 billion in 2015, HeidelbergCement is one of the world's largest building materials companies employing around 45,450 people and operating in more than 40 countries.
Its core business includes the production and distribution of cement and aggregates, the two essential raw materials for the manufacture of concrete.
