Asia Cement Corp (亞洲水泥), one of Taiwan’s leading cement suppliers, on Friday said its Hong Kong-listed subsidiary Asia Cement (China) Holdings Corp (亞洲水泥中國控股公司) has agreed to acquire a cement company in Sichuan, China.
Asia Cement said that after the acquisition, Asia Cement (China) is expected to become the largest cement supplier in Chengdu, the capital of Sichuan Province, because of the significant expansion in annual production capacity.
According to the deal, made through its unit Sichuan Yadong Cement Co (四川亞東水泥), Asia Cement (China) will spend 2.05 billion Chinese yuan (US$331 million) to acquire a 100 percent stake in Sichuan Lanfeng Cement Co (四川蘭豐水泥).
The acquisition agreement will also enable Asia Cement (Asia) to obtain a 100 percent stake in Lanfeng Cement’s wholly owned Sichuan Lanfeng Building Materials Co (四川蘭豐建材).
The deal is still pending approval from shareholders of Asia Cement (China) and Lanfeng Cement as well as Chinese authorities, Asia Cement said.
Lanfeng Cement operates two production lines with a total annual capacity of 5 million tonnes, while Asia Cement (China)’s Yadong Cement makes 6 million tonnes of cement a year.
With the transactions, Asia Cement (China)’s annual capacity in Sichuan would rise to 11 million tonnes, pushing its annual capacity in China to 35 million tonnes.
In addition to its existing production site in Sichuan, Asia Cement (Asia) owns plants located in Jiangxi and Hubei.
According to Asia Cement, Lanfeng Cement, founded in September 2008, is capitalized at 350 million yuan. It is in Pengzhou in Sichuan Province, 19km from Asia Cement (Asia)’s production site and about 40km from Chengdu.
It was Asia Cement’s first acquisition in China since 2010, when it bought a plant in Hubei Province.
Last year, Asia Cement posted NT$8.37 billion (US$276 million) in net profit, or NT$2.12 in earnings per share, up from NT$4.65 billion in net profit, or NT$1.64 in earnings per share recorded a year earlier.
Asia Cement said the improvement in its bottom line resulted from the improvement in Asia Cement (China)’s results, which showed a 108 percent year-on-year increase in net profit.
Asia Cement owns a 68.2 percent stake in Asia Cement (China).