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Al-Ahram Weekly 3 - 9 February 2000 Issue No. 467 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 3 - 9 February 2000 Issue No. 467
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Features Special Profile Travel Living Sports People Time Out Chronicles Cartoons Letters Shaking up cement
By Sherine Abdel-Razek
Al-Ameriya Cement, which accounts for 7.7 per cent of local cement production and is 34 per cent owned by the Holding Company for Metallurgical Industries, is at the centre of intense speculation as Orascom Construction Industries (OCI) and a joint-venture between the French company Lafarge and Titan of Greece compete for control of the company .
Lafarge, whose 1996 bid for a stake in Al-Ameriya was rejected amid controversy, is determined to consolidate its presence in the Egyptian market after last July's acquisition of a 76 per cent stake in Beni Suef Cement.
OCI already own the Egyptian Cement Company (ECC), a promising one year-old cement production company equally determined to corner a greater slice of the local market. OCI made a last minute bid for Torah Cement which was rejected last week by the Capital Market Authority (CMA) on legal grounds.
The privitisation of both Torah and Ameriya is being implemented by tender, the first time tenders have been used in the Egyptian privatisation programme. Investors interested in acquiring a majority state-owned entity are required under the system to place ads in local newspapers announcing their intentions and requesting shareholders of the holding company and individual and institutional investors in the company being privatised to sell their shares before a set deadline. Meanwhile, competitors have the option of increasing both the offer price and the stake they are seeking to acquire.
OCI, for instance, increased its offer for a 40-65 per cent stake in Ameriya Cement from LE66 per share to LE82 after Lafarge-Titan tendered an offer for 75 per cent of the company's equity at LE75.5 a share.
Rumour has it that Blue Circle, a British Company that already owns a 75 per cent share in the Alexandria Cement Company, is also planning to enter the battle.
Victory in the bidding war for either Lafarge-Titan or Blue Circle would consolidate the increasingly dominant position played by foreign companies in the sector. According to a report issued by the Ministry of Public Enterprise three cement companies -- Beni Suef, Assiut and Alexandria Cement -- accounting for 25.3 per cent of Egypt's overall cement production, were acquired by foreign companies in the second half of 1999.
In a move to combat foreign dominance the Egyptian government has announced the establishment of a local cement conglomerate, Al-Ahram Cement. Capitalised at LE600 million, it will invest in the two remaining state-owned cement companies, Helwan Cement and National Cement. It is widely believed that Suez Cement will be a major shareholder in the new company. Having acquired 65 per cent of Torah Cement last week, it now commands 30 per cent of the market.
News of the Suez Cement's acquisition of Torah had a mixed impact on the two companies' shares. While the deal boosts Suez Cement's production to eight million tons, market observers have expressed concern over the financing of the deal through a loan from the National Bank of Egypt (NBE). Suez shares consequently lost 7.8 per cent last week, while Torah Cement gained 1.05 per cent.
