Oyak Eyes Holcim, Lafarge Assets With $2BN for Purchases

By Ercan Ersoy

Oyak Group, Turkey’s military pension fund, has $2 billion in cash for acquisitions and may spend some of it on assets from cement makers Holcim Ltd. (HOLN) and Lafarge SA. (LG)
Oyak is interested in Holcim and Lafarge businesses in countries including Romania, Serbia and Hungary, Celal Caglar, head of the cement and automotive unit of the Ankara-based company, said in an e-mailed statement. Oyak, the largest cement producer in Turkey, completed the purchase of Denizli Cimento from CRH Plc (CRH) and Eren Holding AS for a price between $400 million and $450 million on Nov. 10.
Holcim and Lafarge need to sell units to gain regulatory approval for their planned merger to form the biggest cement company. In Europe, where the largest part of their
cement and crushed-rock divestments will take place, regulators have set a Dec. 15 deadline to either approve the deal or open a deeper investigation.
“We are interested in bidding as Oyak or together with a European group” for assets, Caglar said. Oyak has $2 billion in cash for acquisitions and can leverage it more than five times if needed, he said. “We are closely following this sale process.”
Holcim and Lafarge have said they plan to divest businesses accounting for 10 percent to 15 percent of their combined earnings before interest, taxes, depreciation and amortization, which Holcim has said is equivalent to about $1 billion.

Turkish Growth

Besides selling assets in Europe, the pair have said they plan disposals from Canada to Brazil. Their total divestitures may be valued at 7 billion euros, or about eight times Ebitda, Harry Goad, a London-based analyst at Credit Suisse Group AG, said in a report in April.
Oyak has a cement production capacity in Turkey of 20.1 million tons a year, or 19 percent of the country’s total, through its six plants including Denizli. It has a clinker capacity of 10.3 million tons a year, or 15 percent of Turkey’s total, according to an e-mailed statement.
Oyak expects Turkey’s cement market to grow 5 percent in 2015 after an estimated 6 percent this year, helped by projects including highways, a road tunnel under the Bosporus, stadium constructions, and new metro lines, Caglar said.
Potential buyers for Holcim and Lafarge assets include private-equity-led groups including Blackstone Group LP with Cinven Ltd. and Canada Pension Plan; BC Partners Holdings Ltd. with Advent International Corp.; Bain Capital LLC with Onex Corp.; as well as CVC Capital Partners Ltd. with Abu Dhabi Investment Authority, people familiar with the matter have previously said.
Ireland’s CRH and Brazil’s Votorantim Cimentos SA are also interested in the assets, people familiar with the matter have said.