After expanding its business to Vietnam, cement producer PT Semen Indonesia (SMGR) is planning to strengthen its regional grip by acquiring a cement company in Myanmar, the process of which is expected to be completed in July.
Semen Indonesia president director Dwi Soetjipto confirmed, saying the state run company was in the process of taking over a cement maker in Myanmar.
“It is a private company and the acquisition can be executed after the prospective partner finishes several legal documents,” Dwi said on the sidelines of the new Indarung VI cement factory groundbreaking ceremony in Padang, West Sumatra, on Monday.
Semen Indonesia has prepared a total fund of US$200 million to $300 million for the acquisition. The state company is targeting to finish the acquisition process in July, as reported by kontan.co.id.
Semen Indonesia, he said, is also eyeing a cement factory in Bangladesh that can produce around 600,000 to 1 million tons per year and is targeting to finish the factory’s acquisition process later this year or earlier next year.
“I hope [the acquisition] can finish within the next six months,” he added.
Although Dwi is reluctant to disclose the total investment for the Bangladesh factory, he stated the acquisition of the Bangladesh factory was not as expensive as the takeover of Thang Long Cement Company (TLCC) in Vietnam.
On Nov. 14, 2012, Semen Indonesia acquired 70 percent of Thang Long’s shares from Geleximco with a total transaction value of $157 million.
In a bid to strengthen its position in Vietnam, Semen Indonesia has two options to pick, Dwi said. First, to acquire a new company with a total investment under Rp 1 trillion (US$86 million), far below Thang Long’s acquisition price. In this option, Semen Indonesia will target a small company with a production capacity of around 2.3 to 2.5 million tons.
“Semen Indonesia has met representatives from three companies,” he said, adding that Semen Indonesia would be the majority shareholder, if it picks this acquisition option.
Second, to establish a new factory under the supervision of TLCC. Semen Indonesia, however, will take the demographic factor of Vietnam into account, considering that the market in Vietnam is divided into North and South Vietnam. “The market in South Vietnam is better than in the North, but the supply is dominated by North Vietnam,” he said.
In addition, Semen Indonesia kicked off the construction of its new Indarung VI cement factory in Padang, West Sumatra, on Monday.
State-Owned Enterprises Minister Dahlan Iskan led the groundbreaking ceremony, witnessed by West Sumatra Governor Irwan Prayitno, Dwi Soetjipto of Semen Indonesia and Semen Padang president director Munadi Arifin.
Dwi said that the Rp 3.25 trillion project was targeted to finish in the second semester of 2016 and that the establishment of the factory was based on the increasing demand of cement in Sumatra and West Java areas. (ask)
source: The Jakarta Post