Huaxin Cement (06655. HK) announced that on 16 December 2024, the Purchaser, Huaxin (Hainan) Investment Co., Ltd., a wholly-owned subsidiary of Huaxin Cement, entered into an equity acquisition agreement with the Seller, an independent third party.
Accordingly, the Purchaser intends to acquire from the Seller 100% equity interest in ITATUBA PARTICIPA PARTICIPAÇÕES LTDA (Target Company A) and 40% equity interest in EMBU S. A. ENGENHARIA E COM COMÉRCIO (Target Company B). The total consideration was approximately $186.6 million (as adjusted for financial statement net cash and funds from operations on the closing date).
Target Company A is a holding company whose sole asset is 60% equity interest in Target Company B. Therefore, by acquiring 100% equity interest in Target Company A, the Purchaser may indirectly hold 60% equity interest in Target Company B. The main business of Target Company B is the production and manufacture of aggregate business.
Target Company B has four aggregate plants in Sao Paulo, Brazil, with a total capacity of 8.8 million tons per year (actual production of 6.2 million tons in 2023), located in the metropolitan area of the core economic region of Sao Paulo. The four aggregate factories have excellent geographical location, obvious location advantages in the target market and abundant resource reserves.
This project is one of the decisive measure for the company to actively promote the overseas multi-business development strategy and lay out the emerging potential market, and is a milestone event for the company to develop the South American building materials market. If this project is successfully implemented, it will be the first time for the company and even Chinese cement enterprises to enter the Brazilian building materials market. The company will make full use of its rich successful experience in integrating and acquiring enterprises, as well as its own industrial, technological and management capabilities, to further enhance the performance of the target company through this acquisition and achieve the growth of investment income.
