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TC Mena eyes a full takeover of ADX-listed Gulf Cement: TC Mena Holdings — a subsidiary of Italy’s Buzzi Unicem and the largest shareholder in Gulf Cement Company (GCC) — launched a mandatory tender offer to acquire the remaining 62.4% stake in ADX-listed GCC, according to an official bid document (pdf) released on Thursday. TC is seeking to secure a controlling stake at a minimum of 50% plus one share. TC will tap its own reserves to finance the acquisition.
Why is this important? The transaction would allow TC to gain full control over one of the UAE’s largest cement producers and exporters. The Ras Al Khaimah-based company claims to be the largest cement producer in the UAE with an annual production capacity of 2.5 mn tons of cement and 1.3 mn tons of clinker — set to rise to 3.8 mn tons upon completion of its new plants. The cement producer also has a key export hub in Ras Al Khaimah near raw material sources and ports, and supplies to both local and international markets. The company netted some AED 41.5 mn in losses last year.
Transaction details: The bidder wants to buy the additional stake for a cash-consideration of AED 143.5 mn at AED 0.56 apiece — a slim premium to its closing share price of AED 0.55 on Wednesday. The offer values the company at AED 229.9 mn, according to our calculations.
SOUND SMART- This potential transaction checks all the boxes to qualify for what’s called a “distressed asset acquisition,” with the buyer taking advantage of the company’s weak financial position and cheap share price with the goal of turning it around to become profitable and create higher value for shareholders. TC is “pursuing this acquisition to enhance GCC’s operational efficiency, reinforce its market position, and drive long-term value creation for all stakeholders,” it said in the offer document.
What’s next? Shareholders have until Friday, 11 April to accept the offer, which is also pending regulatory approvals from the Securities and Commodities Authority (SCA) and the ADX. Should the transaction go through, Gulf Cement would continue to operate independently and retain its trade name post-acquisition, with no major changes in the cards.
ADVISORS- Emirates NBD is quarterbacking the transaction as financial advisor, lead manager and receiving agent with Ibrahim N Partners providing legal counsel.
