Illustrative image (Source: VNA)A few months ago, Lafarge Holcim Group signed a deal to sell a 65percentstake in Holcim Vietnam to SCCC for 580 million USD. Holcim products willhereafter be marketed under the INSEE brand.
Recently SCG Cement-Building Materials Co Ltd, a subsidiary of theSiam Cement Group (SCG), bought the shares of Vietnam Construction MaterialsJSC for 156 million USD.
The significance of the Thai investors’ multi-million-dollar dealsis that the Vietnamese cement industry remains very attractive to foreigninvestors though it is now mired in difficulties.
Analysts said acquisitions were much cheaper for the Thaicompanies than building their own factories.
Building a new factory in Vietnam will cost 170-180 USD per tonneof cement produced. Acquisitions bring down the cost to 105-110 USD.
Besides, with their financial and administrative advantages, Thaicompanies can easily take on their Vietnamese rivals.
A construction ministry official said it was inevitable thatforeign companies would invest in the Vietnamese cement industry consideringthe enormous opportunities it offers them.
The strong recovery in the real estate market and the resumptionof many major construction projects are an important reason for the rise indemand for building materials.
How do Vietnamese cement companies benefit from these M&Adeals?
According to the Vietnam Association of Finance Investors, one ofthe many benefits is that Vietnamese cement companies will have access tomassive resources to improve their technology and equipment and management andexpand export markets by taking advantage of the distribution systems of theirforeign investors.
It said further that to attract foreign investors in the cementindustry, the Government should remove the foreign ownership cap in theindustry, which is now at 49 percent.
The Vietnam Construction Association did not oppose the M&Adeals by foreigners but nevertheless warned the Government not to allow foreignbusinesses to take advantage of the current difficult situation in the industryto take over domestic companies. That would affect the country’s interests, itsaid.
The Vietnam Materials Association concurred saying the Governmentshould not let Vietnamese cement companies become a mere source of rawmaterials, energy and labour for foreign companies.
It said local companies should be restructured to becomecompetitive and take control of the market.-VNA
VNA
