Lafarge surges to 13-month high at RM4.34

The deal is the latest by LafargeHolcim which has earlier this month said it was selling it operations in Malaysia and Singapore, and also recently sold its operations in Indonesia

KUALA LUMPUR: Lafarge Malaysia Bhd’s share price hit its highest level in more than a year and surged almost 140% year-to-date to RM4.34.

The cement maker was the second-biggest gainer on Bursa Malaysia yesterday, rising about 14.81% or 56 sen as market closed. About 1.34 million shares changed hands.

The stock’s market capitalisation grew by almost RM2.2bil over the last six months on the back of major developments related to the multinational corporation, which include the entry of a new controlling shareholder and the revival of major infrastructure projects in the country.

Lafarge Malaysia’s strong share price performance also seems to be correlated with the improved sentiment in the domestic construction sector. For context, the Bursa Malaysia Construction Index has grown by about 37% year-to-date.

On May 2, YTL Corp Bhd – via its cement arm YTL Cement Bhd – entered into a deal to acquire LafargeHolcim’s entire 51% stake in Lafarge Malaysia for US$396mil (RM1.625bil). Shares in Lafarge Malaysia jumped 12.72% or 42 sen to RM3.72 on the day the deal was announced.

Following the acquisition, which was completed on May 17, Swiss-based LafargeHolcim has exited the Malaysian building material scene completely. The takeover has enabled YTL to become the largest cement company in Malaysia.

YTL Cement has also made an unconditional mandatory takeover offer for the remaining 49% owned by the other minority shareholders. It offered to acquire the remaining shares at RM3.75 per unit. However, AmInvestment Bank has recommended that minority shareholders reject YTL’s takeover offer.

On June 3, AmInvestment Bank said YTL’s offer price of RM3.75 was lower than and represented a discount of 2.2% to 18.5% on the range of fair values of RM3.83 and RM4.60 per share, based on the sum-of-parts valuation.

According to the brokerage, the takeover would see the emergence of the enlarged YTL Cement as a clear market leader with a capacity share of about 63% in Peninsular Malaysia, which may potentially increase the demand and average selling price of cement (currently at the lowest level in the last 10 years).

It also said one of the main reasons for the current low market price of Lafarge Malaysia shares, which have been trading below the offer price since May 2018, was due to the suspension announcements.

“AmInvestment Bank is of the view that the offer is not reasonable, as it is the intention of YTL Cement to maintain the listing status of Lafarge Malaysia on the Main Market of Bursa Malaysia and keep the shares traded on Bursa Malaysia unless YTL Cement either individually or jointly with its associates hold in aggregate 90% or more of the Lafarge Malaysia shares, and Lafarge Malaysia does not comply with the public spread requirement,” it said.

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