Lafarge: Cementing Its Reach In Emerging Markets

As noted in The International Herald Tribune, Lafarge – the world’s biggest cement maker – agreed to buy Egypt’s Orascom Cement for $12.8 billion in a deal that would raise its earnings and exposure to high-growth emerging markets, particularly in Africa.  The  deal will see Nassef Sawiris, a shareholder in Orascom Construction Industries, take an 11.4 percent stake in Lafarge and a seat on the Lafarge board.

“…Lafarge said the purchase would allow it to get 65 percent of its earnings before interest, tax, depreciation and amortization from emerging markets by 2010, compared with 45 percent now. Orascom, based in Cairo, is the largest cement maker in the Middle East.

Lafarge said that buying Orascom Cement would give it a leading position in the Middle East and Mediterranean basin region.

“The purchase will allow us to develop our market positions in emerging markets as well as building factories there,” Lafont said on a conference call with reporters. “Orascom will give us high profitability in a high growth area.”

As reported by Riba Capital, Lafarge may also have plans to consolidate its business in East Africa.  Lafarge currently has a 41 per cent stake in East Africa Portland, a 17 per cent stake in Athi River Mining Ltd., and a 58.6% controlling stake in Bamburi Cement.  The company also holds a majority stake in cement manufacturers in both Uganda and Tanzania with plans currently underway to double the capacity of the Uganda plant.

This entry was posted on Monday, December 10th, 2007 at 11:26 am and is filed under Egypt.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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