Lafarge: Too Early to Gauge Impact of Proposed Merger


24 May 2014


Lafarge: Too Early to Gauge Impact of Proposed Merger


KUALA LUMPUR: Lafarge Malaysia Bhd says it is too early to speculate on the impact of the proposed merger announcement between its French parent Lafarge SA and Swiss-based Holcim Ltd.


"A lot needs to done between now and the merger. There is a need to satisfy many competition authorities and various work councils around the world.


"So right now, it is premature to look at the impact of the proposed merger exercise on Lafarge Malaysia," Lafarge Malaysia president and chief executive officer Bradley Mulroney told reporters after its annual general meeting yesterday.


Mulroney said both Lafarge SA and Holcim Ltd have not announced anything specific, including on its Malaysian operations.


He clarified that Lafarge SA and Holcim Ltd had announced that the proposed merger may involve a divestment of assets worth US$5billion (RM16 billion).


An analyst said if the merger goes through, an asset injection exercise of Holcim Malaysia Sdn Bhd into Lafarge Malaysia appears to be a possibility.


"Holcim Malaysia is currently operating a cement plant at Pasir Gudang, Johor.


There will be synergy in the event Holcim Malaysia is injected into Lafarge Malaysia, which also owns a cement plant in Johor, to tap the southern corridor of Peninsular Malaysia.


"The likely merger may further strengthen Lafarge Malaysia's leading position in the Malaysian cement market, boosting market share to close to 50 per cent.


Meanwhile, Lafarge Malaysia is considering boosting its export of surplus cement to countries around the Indian Ocean region such as Sri Lanka, Bangladesh, Maldives and Mauritius.


According to Mulroney, despite plans to boost cement exports, the company prefers to prioritise cement sales in Peninsular Malaysia as the company has a commitment to the government to ensure that there is sufficient supply of cement in the country.


Mulroney also said the company has allocated a capital expenditure of RM300 million over a period of 18 months to increase cement production to 1.2 million tonnes.


Mulroney stressed that Lafarge Malaysia will only commit to the export market if there is spare capacity.

Lafarge Malaysia owns a total of 35 plants in the country, of which three were launched over the last few months.