Blue Circle's pounds 351m buy in Malaysia
BLUE CIRCLE, the building materials group, yesterday gave the ailing Malaysian economy a further vote of confidence, paying pounds 351m to buy Kedah Cement Holdings, a Malaysian cement manufacturer labouring under a heavy burden of debt.
Blue Circle is paying pounds 166m for the shares and assuming a further pounds 185m of debt. In the 12 months to March 1998 Kedah made a profit of pounds 10.3m before exceptional items.
In August Blue Circle paid pounds 185m for the remaining half share it did not already own in the Malaysian market leader, Associated Pan Malaysian Cement, which has a 30 per cent market share.
Kedah is the country's second largest cement producer and its acquisition will give Blue Circle 48 per cent of the Malaysian market. Its production plants could also supply worldwide markets.
Demand for cement in Malaysia fell 26 per cent in the first half of 1998 and is expected to be 35 per cent down in the second half. A further 10 per cent fall is expected next year. An upturn is forecast in 2000, encouraged by the Malaysian government's plan to inject pounds 2bn into infrastructure projects to pull the economy out of recession.
Keith Orrell-Jones, the chief executive of Blue Circle, said: "The economic setback has presented us with the opportunity to enhance our leading position in the Malaysian cement industry on favourable terms."
Blue Circle shares fell 5p to 298p initially but rallied to close 12p higher at 315p.
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