CRH enter Chinese cement market
CRH plc have signed a Letter of Intent to acquire an equity interest in the cement operations of the Jilin Yatai Group (Yatai Cement), one of the 10 largest cement groups in China, for an undisclosed sum.
Yatai Cement’s operations comprise four integrated cement plants and one grinding station, with a total cement capacity of approximately 9 million tonnes per annum, located in the provinces of Jilin and Heilongjiang in north-east China.
The Letter of Intent provides for the initial purchase of a 26% equity stake with an option to acquire further shares after three years up to a maximum of 49%. Completion of the proposed transaction is subject to detailed negotiation and due diligence, and to Chinese government approval.
CRH have also reached agreement to acquire the assets of another cement plant in Heilongjiang province. The plant, which will operate as Harbin Sanling Cement Co., is a modern facility with two clinker production lines and a total cement capacity of 650,000 tonnes per annum.
Commenting on the deals, CRH chief executive Liam O’Mahony said: ‘CRH’s proposed equity stake in Yatai Cement when, combined with the agreement to acquire the Harbin Sanling Cement Co., provides an excellent opportunity for CRH to develop a strong position over time in what we believe are attractive markets in north-east China with good long-term growth prospects.’
For the six months ended 30 June 2006, CRH plc recorded a pre-tax profit of €526 million (£352.6 million), up 37% on the same period in 2005. Turnover was up 27% to €8.03 billion (£5.38 billion).
