LAFARGEHolcim Ltd.’s listed Philippines unit soared the most in more than a decade, after people with knowledge of the matter said the global cement giant is exploring options for its business in the country.
Shares of Holcim Philippines, Inc. jumped as much as 34% in early Manila trading Monday, the most intraday since July 2004. They were up 13% to P7.19 at 10:41 a.m. LafargeHolcim is weighing options for its Philippines business, including a potential sale, as it seeks to further reduce debt by selling non-core assets, according to the people.
Europe’s biggest cement maker is considering the divestment as part of a broader strategic review of its Southeast Asia operations following the sale of its Indonesia business, the people said. LafargeHolcim may keep the business if it decides it can’t fetch an attractive enough price, according to the people, asking not to be identified because the information is private. A spokesman for the company declined to comment.
The seller may seek to value the Philippines assets at around $2.5 billion, though some suitors have indicated they think the business is worth less, the people said. A rival seeking to purchase all of LafargeHolcim’s plants in the country may face antitrust issues, which could make it more difficult to find a single buyer, they said. If the business is sold, the next disposal candidate would be Malaysia, they said.
TURNAROUND PLAN
LafargeHolcim has been divesting assets as part of a five-year turnaround plan, announcing in November that it will sell its Indonesian unit for $1.75 billion including debt to PT Semen Indonesia. Chief Executive Officer Jan Jenisch said in May the company’s Southeast Asia business has been “a bit more challenging” amid price pressure in markets such as the Philippines and Malaysia.
Other Philippine cement makers also rallied Monday, with Cemex Holdings Philippines, Inc. gaining as much as 7.3 percent, the most intraday in more than a week. Aboitiz Equity Ventures, Inc., a conglomerate whose businesses include building materials, jumped as much as 5.5 percent while Eagle Cement Corp. rose as much as 1.9 percent.
A sale by LafargeHolcim could lead to higher valuations for cement companies in the Philippines, according to Rachelle Cruz, an analyst at AP Securities, Inc. Eagle Cement and Cemex are potential buyers of the business and could end up with a larger market share if they succeed with a bid, Ms. Cruz said by phone Monday.
LafargeHolcim said in November it has one or two more disposals coming up after the Indonesia sale. The company’s cost-cutting plan is aimed at regaining firepower to make acquisitions, Mr. Jenisch told investors at the time.
Shares of LafargeHolcim rose 2.4 percent to close at 46.25 Swiss francs in Zurich on Friday. — Bloomberg
