HeidelbergCement takes over Italcementi

HeidelbergCement, Germany’s largest cement maker, is to buy a 45 per cent stake in Italcementi, the Italian building materials company, for €1.7bn in cash and shares, a move that will see it later acquire the remainder of the company.

The deal marks the latest round of consolidation in the cement and crushed rock industry, with the two companies combining to create the number two group in the cement industry worldwide, with operations in more than 60 countries.

HeidelbergCement will pay €10.60 per Italcementi share for the 45 per cent stake. In a statement late on Tuesday, it said that after that transaction closes next year, it will launch a takeover offer for the remaining shares at a price equal to €10.60 in cash. The deal values Italcementi’s equity at €3.7bn in today’s terms. Italcementi shares closed 6.5 per cent higher on Tuesday at €6.59.

The deal comes come just weeks after Europe’s two largest cement and crushed earth companies Holcim and Lafarge completed a €41bn combination.

Italcementi is 45 per cent owned by the Pesenti family, one of Italy’s biggest industrial dynasties. HeidelbergCement’s largest shareholder with a 25 per cent is the Merckle family.

Three big global players — LafargeHolcim, HeidelbergCement and Cemex — already dominate the industry, which has been under investigation by the European Commission for cartel behaviour and price fixing since 2008.

HeidelbergCement, which has 45,000 employees in 2,300 locations in more than 40 countries, is present in northern Europe, Asia and the US. Italcementi, which is in 22 countries, is extensively exposed to southern Europe. Both groups have businesses in the US. Italcementi made revenues of €4.1bn in 2014 compared with around €13bn in sales at HeidelbergCement.

“The tie up of HeidelbergCement and Italcementi is ideal. No other two groups in the sector have such complementary exposure,” Bernd Scheifele, chief executive of HeidelbergCement said in a statement.

Carlo Pesenti, CEO of Italcementi, said the deal would “strengthen [Italcementi] for the future”.

The cash-and-shares deal will see Heidelberg taking control of the 45 per cent of Italcementi held through the Pesenti family’s Italmobiliare vehicle at €10.60 per share. The Pesenti family will receive around 5 per cent of the combined group as part of the deal making them the second largest shareholders after Germany’s Merckle family.

Morgan Stanley and Deutsche Bank worked with HeidelbergCement. Mediobanca advised Italmobiliare.

The deal underlines a period of dynamism in corporate Italy where several of the country’s largest family-owned companies are in ferment spurred by dynastic issues of succession and a desire to diversify beyond Italy following a brutal three-year recession.

Italy’s Agnelli family, the majority owners of Fiat Chrysler Automobiles through family investment fund Exor, which has traditionally set the tone for Italian capitalism encapsulates the change. Under Exor chairman John Elkann, the grandson of Gianni Agnelli, the family is seeking to expand into US reinsurance with a bid for PartnerRe and has said it wants to up its stake in The Economist Group.