Two of PIF’s cement heavyweights are mulling a merger. YanbuCement and SouthernProvince Cement (SPCC) have signed a non-binding MoU to assess the feasibility of merging, they said in separate disclosures to Tadawul (here and here). They’ve given themselves up to 12 months to wrap up their talks. The disclosures say nothing about valuation or future strategic plans for the merged entity.

Why it matters: The merger would create a substantial new player in the Kingdom’s west and comes as the PIF looks to better-structure the nation’s relatively fragmented construction industry. PIF lists both SPCC and Yanbu among its holdings. Publicly available data suggest PIF directly holds 10% of Yanbu and 37.4% of SPCC.

About SPCC: Southern Province Cement is one of the largest cement manufacturers in the Middle East, according to the PIF’s website, and had a market cap of SAR 5.2 bn at yesterday’s market close. The Abha-based cement producer owns and operates a total of three plants in Jazan, Assir, and Makkah with a combined manufacturing capacity of 40k tons per day.

About Yanbu Cement: Yanbu Cement is the largest cement producer in the western region, according to the PIF with an installed capacity of 7 mn tons of clinker and a total dispatch capacity of over 10 mn tons of cement per year. Its plant is located in Ras Baridi northwest of the Yanbu Port. The Jeddah-headquartered company has a market cap of SAR 4.4 bn.

A look at their financials:

  • SPCC’s net income rose 27% y-o-y to SAR 62.1 mn in 1Q 2024, while its revenues were down 16.4% y-o-y during the period to SAR 250.7 mn, according to its financial statements (pdf).
  • Yanbu Cement’s net income was up 14.3% y-o-y to SAR 58.3 mn during the first three months of the year, with its revenues inching up 4.6% y-o-y yo SAR 234.2 mn, according to its financial statement (pdf).
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