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[December 2007]
Lafarge Acquires Orascom Cement
The Board of Directors of Lafarge, chaired by Bruno Lafont, met on 9 December 2007 and approved the acquisition by Lafarge of Orascom Construction Industries Cement Group and the principle of board representation for Groupe Bruxelles Lambert and Nassef Sawiris, majority shareholder with his family of Orascom Construction Industries.Orascom Cement holds a leading position in the Middle East and the Mediterranean Basin and will bring a cement capacity of 35 million tons in 2008 increasing to 45 million tons in 2010, with state-of-the-art assets.
The company has a projected annual sales growth of 30% and annual EBITDA growth of 33% (2007-2010); an operating margin of over 40% in 2008 thanks to very low production costs; and projected sales of US$2.6 billion and EBITDA of US$1.3 billion in 2008.
Lafarge sees this acquisition as a value creating transaction. It has cost the group €8.8 billion for 100% of Orascom Cement, assumption of €1.4 billion in net debt. This has been financed through €6 billion of debt and the issuance to Nassef Sawiris of 22.5 million new Lafarge shares at €125 per share (€2.8 billion). There is to be a long-term investment by Nassef Sawiris with an 11.4% shareholding in Lafarge.
Bruno Lafont, Chairman and CEO of Lafarge, said: “This acquisition of a leading Egyptian group is a decisive opportunity to accelerate our profitable growth strategy in cement in emerging markets. As a result of the transaction, 65% of Lafarge’s EBITDA is expected to be generated in emerging markets by 2010, relative to 45% in 2007. Orascom Cement’s positions are concentrated in a fast-growing region that will fully benefit from the boom in oil and natural gas revenues. The two companies are wholly complementary geographically with considerable potential for synergies. We will create a powerful operational regional center in Egypt.
“Through this acquisition, Lafarge is considerably strengthened, with a presence in all of the fastest-growing regions of the world and boosted multicultural teams. This transaction allows us to substantially raise our 2010 financial targets for EPS, ROCE and free cash flow.
“The Group’s transformation is accelerating. Lafarge is well prepared to enter this new growth phase, become the best performing player in the sector in terms of growth, costs and results, and be the leader in emerging markets.
“I am delighted with Nassef Sawiris’s long-term commitment as a shareholder of Lafarge and him joining the Board of Directors. This is a strong sign of confidence in the future of our Group. I am also very pleased about Groupe Bruxelles Lambert’s support of our strategy, which enables this transaction to take place in very good conditions. Groupe Bruxelles Lambert joining our Board of Directors is very good news for Lafarge and is something that I have wished for.”
ENDS