BB gives Lafarge 90 days to remit Tk 504cr - Share market analysis of dhaka stock exchange, Bangladesh

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21 November, 2017 10:28 AM Source: The Daily Star Bangladesh


Bangladesh Bank has kept the valuation of Holcim shares unchanged at Tk 57,202 -- 47 percent lower than the price proposed by Lafarge -- in its final approval, casting a pall of uncertainty on the proposed merger of the two cement giants.

The central bank has given Lafarge 90 days more to remit the money to Amsterdam-based Holderfin, whose shares in Holcim Cement Bangladesh it is acquiring.

As per the approval given back in September 17, Lafarge can remit a total of Tk 504.78 crore for 88,244 shares of Holcim within one month, meaning the process was supposed to be completed by October 17. But Lafarge could not do it.

Lafarge had valued each share of Holcim at Tk 1.06 lakh and it sought permission from the BB to remit Tk 936 crore.

Earlier in October, Lafarge asked the BB to review its decision, according to a position paper of the company.

“For the interest of both Lafarge Surma Bangladesh and Holcim Cement (Bangladesh), its shareholders, employees and for the future investment in Bangladesh, allowing the remittance of the full amount under the share purchase agreement is very important,” it said in its position paper.

Otherwise, there is every possibility that this deal will fail, which will be a bad example for the present and potential foreign investment in Bangladesh, it added.

In December last year, Lafarge Surma signed an agreement with Amsterdam-based Holderfin to purchase its holdings of Holcim Cement Bangladesh for Tk 936 crore ($117 million). Each of Holcim's 88,244 shares was valued at $1,325.88 (Tk 1.06 lakh).

The central bank has set the share price of Holcim in line with the international valuation method, said a BB official.

It compared the share price of Holcim with that of British American Tobacco Bangladesh, whose share is considered the most expensive in the Dhaka stock market.

The BB also looked at the share price of Heidelberg Cement Bangladesh, a comparable stock for both Lafarge and Holcim.

The world's leading cement makers, France's Lafarge and Switzerland's Holcim, merged in July 2015 to form LafargeHolcim.

LafargeHolcim and Cementos Molins, a Spanish cement manufacturer, own through their joint venture with Surma Holding, the majority of the shares of Lafarge Surma Cement.

In November last year, the board of Lafarge Surma announced that it was exploring the opportunity of combining the businesses of Holcim Bangladesh and Lafarge Surma. The acquisition was approved by the board a month later.

Subsequently in January this year, Lafarge Surma Cement changed its name to LafargeHolcim Bangladesh Ltd.

Upon completion of the transaction, Lafarge will become a major player in the local cement market with an annual production capacity of 4.2 million tonnes.

Contacted yesterday, LafargeHolcim declined to comment on the matter.

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