Republic Cement acquires Lafarge cement unit

The board of Republic Cement Corp. (RCC) has approved the acquisition of Continental Operating Corp., a wholly-owned subsidiary of Lafarge Cement Philippines Inc., for P1.3 billion, making RCC the largest cement group in the country.

In a disclosure to the Philippine Stock Exchange, RCC said it will issue a convertible loan note worth P1.3 billion to Lafarge in exchange for the latter’s shares in Continental.

The notes will carry an interest rate of eight percent per annum and are convertible into 1.35 billion common shares of RCC after five years from issue date.

Lafarge currently holds 239.04 million common shares of RCC, equivalent to 4.13 percent of RCC’s issued and outstanding capital stock.

"As a result of the proposed acquisition, the combined operations of the group companies will be the largest cement concern in the Philippines with a total rated capacity of over 8.5 metric tons of clinker per year," RCC said.

RCC has interests in six cement companies: Fortune Cement Corp., Premier Cement Corp., Iligan Cement Corp., Mindanao Portland Cement Corp., FR Cement Corp. and Lloyds Richfield Industrial Corp.

Continental, meanwhile, manufactures cement in two plants, one in Norzagaray, Bulacan and the other in Tanay, Rizal.

RCC said the proposed combined operations of the group is expected to benefit from streamlined and simplified management and operations in terms of procurement, sales, marketing and distribution; and consolidation of well-established brands and the expertise in the production and marketing of different products.

The consolidation is also expected to benefit from nationwide coverage with a particularly strong network in central and southern Luzon; maximum technical leverage for operational excellence and optimum sharing of people, and the prospect of an enhanced credit rating as a result of a larger market share and asset base.

RCC was incorporated in 1955 primarily to engage in the manufacture and sale of cement, marble and all other kinds and classes of building materials, and the processing or manufacture of materials for any industrial or commercial purposes.

The company manufactures the Republic Portland and Pozzolan Cement brands.