The Commission for the Protection of Competition (CPC) has decided that the agreement between Vassiliko Cement Works Pcl (VCW) and the Cyprus Cement Company Pcl (CCC),will not hinder competition in the market, hence it has given the green light for the deal to proceed subject to certain conditions and guarantees undertaken by the two parties.
VCW and CCC have proposed merging their operations together regarding the production and sale of cement, as well as the operations of the quarry and ready mix business lines.
Specifically, following the implementation of the above agreement, VCW will undertake the management of CCC’s operations with respect to the production and sale of cement, acquire via ‘CCC Building Material Limited’ 100% of the issued share capital of ‘Latouros Quarries Ltd’, ‘C.C.C. Aggregates Ltd’, ‘Athinodorou Beton-Transport Ltd’, ‘Athinodorou Beton-Estates Ltd’, ‘Athinodorou Beton Ltd’ and ‘Elmeni (Quarries) Ltd’, terminate or substantially reduce the production of cement at the Moni cement plant with the operation of VCW’s new cement production unit at the Vassiliko area.
The Company will issue (subject to EGM approval) 18.199.794 shares to CCC at the weighted average of VCW’s closing price during the 3 months that preceded the date of the agreement (9 March 2007). The shares will represent 25% of the issued share capital of VCW and will be listed on the CSE.
CCC’s principal activity is the production and sale of cement. CCC is the second largest cement and clinker producer in
According to estimates, the issue price of the new shares (given EGM approval) will stand at EUR 2.72 per share, with the total consideration amounting to EUR 49.5 mln according to Marfin Egnatia estimates. Assuming that VCW will acquire 100% of CCC’s cement production line (excluding any other business lines), Egnatia believe that this will have an additional contribution to VCW’s revenues by CYP 16 mln (450k tons of cement production sold at an average price of CYP 35.5 per ton). In addition, given that VCW’s cost structure is at least maintained and no additional synergies are processed then this will add CYP 2.5 mln to the new entity’s bottom line.
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