Cemex to sell SG stake to Rajawali

The Jakarta Post, Jakarta

Cemex SA, the world's third-largest cementmaker, announced Thursday it would sell its stake in Indonesia's largest cement company PT Semen Gresik SG to local investor Rajawali Group.

The Mexican-based company would sell the 24.9 percent stake in SG for US$337 million, Cemex said in a Business Wire statement as quoted by Bloomberg.

The deal will become effective once the government, which owns a 51 percent stake in SG, approves it and other conditions are met, the statement said.

Vice President Jusuf Kalla said last month that the government wanted to see Cemex shares in SG bought by local investors because a cement company was considered as a strategic industry, and to help avoid a cement cartel if SG falls into the control of foreign investors.

German-based Heidelberg now controls PT Indocement Tunggal Prakarsa, while Swiss-based Holcim Ltd controls PT Holcim Indonesia, formerly known as Semen Cibinong.

Kalla's statement came amid reports that Rajawali Group and other local investors were competing with foreign giants, particularly France's Lafarge Group and Australia's construction giant Boral, for the SG stake.

Rajawali, a local business group owned by businessman Peter Sondakh, has been credited for successfully turning around or increasing the value of companies it acquired in the past.

Cemex announced the plan to sell the SG stake in March in a bid to end a four-year dispute with the government.

Cemex has been left with a minority stake since 1998 after the government reneged on a contract to grant control of SG to Cemex. The Mexican cementmaker, which usually runs the companies in which it buys stakes, had sought the government's permission to raise its stake, saying it could save $50 million annually at the unit by increasing efficiency.

Cemex bought the stake four months after President Soeharto, who ruled Indonesia unchallenged for 32 years, was forced out of office following the Asian financial crisis that triggered violent street protests.

Cemex would sell the SG shares for $2.28 each, or 28 percent less than the closing price of SG shares on the Jakarta Stock Exchange Wednesday.

SG shares on Thursday plunged 12.5 percent to Rp 24,500 in a declining market due to profit-taking.

The decline in SG shares is "a temporary reaction", said Ferry Yosia Hartoyo, head of Indonesian research at DBS Vickers Securities as quoted by Bloomberg. "The market is disappointed as people speculated it would be sold at a premium or at market price. Still, there's a positive part. With the buyer being a local, it will cool tensions."
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