Baring sells Korea's Halla Cement to trade buyer

The buyer said in a filing that it would pay KRW365.1 billion ($335 million) for a 98.4% interest held by Korea Cement Holdings – an offshore vehicle controlled by Baring – and 1.6% from other shareholders. The transaction price does not include debt, with local media previously reporting an enterprise valuation of KRW700-800 billion.

Asia Cement, a mid-tier domestic construction materials producer, was selected as the preferred bidder for Halla in November following the launch of a sale process earlier in the year.

Baring and Glenwood Private Equity – a GP led by Sang-Ho Lee, son of Hak-Soo Lee, formerly vice chairman at Samsung Group – acquired the business from LafargeHolcim in 2016 for approximately KRW560 million. Baring subsequently bought out its partner to take full control.

Halla was founded in 1978; Lafarge paid $114 million for a 39.9% interest in 2000 and later assumed majority ownership. At the time of the 2016 sale, the company was Korea's fifth-largest cement producer. It has three production facilities with a combined annual capacity of approximately 10 million tons.

The acquisition of Halla would reportedly increase Asia Cement’s local market share to 20% from the current 7%, putting it on a par with market leaders Ssangyong Cement and Hanil Cement. Halla recorded sales of KRW470.1 billion in 2016, up from KRW465.8 billion the previous year. Net income rose from KRW41.1 billion to KRW63.8 billion over the same period.

Asia Cement’s revenue and net income came to KRW455.7 billion and KRW42.6 billion in 2016. However, its total assets were KRW850.5 billion compared to KRW640 billion for Halla.

Ssangyong is majority-owned by domestic GP Hahn & Co, which has made a string of cement acquisitions with a view to consolidating the industry. Hanil became the largest player by market share earlier this year when it bought Hyundai Cement, outbidding rivals including Ssangyong.

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• Topics
• North Asia
• Trade sale
• Industrials
• South Korea
• Baring Private Equity Asia
• Exit
• manufacturing