Bloomberg News

Sabanci Looking to Buy Cement Producers in Nearby Countries

January 22, 2013

Haci Omer Sabanci Holding AS (SAHOL), Turkey’s second-largest industrial group after Koc Holding AS (KCHOL), is seeking to acquire cement-production assets in nearby countries to double its capacity in five years.

Sabanci Holding, which cooperates with HeidelbergCement AG (HEI) in Akcansa Cimento AS (AKCNS) and owns Cimsa Cimento Sanayi & Ticaret AS (CIMSA), is in talks with several cement producers in countries near Turkey, said Mehmet Gocmen, head of the Istanbul-based Sabanci’s cement group. He didn’t name the countries.

Akcansa and Cimsa are planning growth through deals both in Turkey and abroad as Turkish regulation bans a single company from controlling more than 25 percent of the domestic market. About 20 international and local cement producers, including Italcementi SpA (IT) and Cimpor Cimentos de Portugal SGPS SA, operate in Turkey, where cement makers have a total annual capacity of about 106 million tons, according to the Cement Producers’ Association of Turkey.

“We are looking into countries within two hours of flying distance from Istanbul,” Gocmen said. “Our financial position is strong enough to make more than one acquisition at a time, for Akcansa and Cimsa separately,” he said.

Sabanci, which has as much as 13 million tons of cement production capacity at Cimsa and Akcansa combined, plans to double capacity or at least make it above 20 million tons in five years, Gocmen said.

Cimsa fell 0.2 percent to 9.88 liras at 12:29 p.m. in Istanbul trade and Akcansa fell 1.2 percent to 12.1 liras.

Cimsa bought 51 percent of Afyon Cimento (AFYON) Sanayi AS from Italcementi for 57.5 million liras ($33 million) last year.

Cement to Grow

Turkey’s cement industry will probably grow this year after stagnating in 2012 because of a slowdown in the construction industry, Gocmen said. Large infrastructure including highways, the Bosporus bridge and power plant projects will boost cement demand this year, he said.

The government auctioned a $6.5 billion highway project to link Istanbul and the eastern city of Izmir, including a three- kilometer suspension bridge across the Sea of Marmara, to consortia involving Turkish, Italian and Japanese builders. Astaldi SpA (AST) and its partner IC Ictas Insaat Sanayi Ve Ticaret AS also won a contract to build a separate $3 billion suspension bridge and connecting roads over Istanbul’s Bosporus strait.

Cement exports, about 20 percent of Turkey’s total production, are expected to decline as more countries develop their own cement industries, Gocmen said.

To contact the reporter on this story: Ercan Ersoy in Istanbul at eersoy@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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