Swiss-based cement giant Holcim has recently signed a deal with Companhia Siderύrgica Nacional (CSN), a Brazilian steelmaker, to sell its business for $1 billion. Holcim said that through this deal, it could finally shift its focus and realign its priorities and resources.
"This divestment is another step in our transformation to become the global leader in innovative and sustainable building solutions giving us the flexibility to continue investing in attractive growth opportunities," Holcim Chief Executive Officer Jan Jenisch said in quotes by Reuters.
The company is currently in the process of reorganization of its business, including several divestments. Holcim is diversifying away from its core operations of cement and aggregates and shifting into the more lucrative business of technology to maintain the company's sustainability.
Last January, Holcim announced a $3.4 billion deal to purchase roofing business Firestone Building Products from Japan's Bridgestone Corporation. This deal was Holcim's biggest acquisition in more than 10 years.
The company said that the recent sale of its Brazil cement business to Companhia Siderύrgica Nacional would significantly reduce its debt ratio. Through this successful deal, Holcim will now be able to reinvest in the business segment it has been working on following its Firestone purchase.
The company's divestment includes its five integrated cement plants, four grinding stations, six aggregates sites, and 19 ready-mix concrete facilities.
The deal is also immensely beneficial for CSN as it has a high interest in acquiring various cement firms in the fragmented Brazilian market.
Last June, the cement unit bought one of its rivals, Elizabeth Cimentos for $218 million. CSN was supposed to have its initial public offering (IPO) last July but was temporarily put on hold because of unfavorable market conditions. But the company has recently said that it remains hopeful that it can list and raise money to fund deals.
Because of the rising demand for real estate in Brazil, the demand for cement has sharply risen, which provided a boost for the country's cement businesses, especially CSN
In a study conducted by SNIC, an industry group, cement's total sales in Brazil in the first eight months of the year jumped almost 12% which is equivalent to 44 million tonnes of cement.