LafargeHolcim shares soar amid deal speculation

LafargeHolcim Bangladesh Ltd shares soared 15.5% on the Dhaka Stock Exchange (DSE) in August riding on deal speculation.

The speculation that Netherlands-based Surma Holding BV, the foreign parent company of the cement manufacturer, is going to sell off its stake at a price higher than the current market rate, is fuelling its stock price, said stockbrokers.

News updates on Adani's multibillion-dollar acquisition of Holcim assets in India, recently followed by regulatory approval there for launching an open offer to the general shareholders to exit at near market value, strengthened the speculation on the bourses of Dhaka and Chattogram.

Adani, the rapidly expanding Indian conglomerate, might be the buyer of the parent company's stake in LafargeHolcim too.

Declining the request for a comment, the company said, "As a policy, we comment neither on rumours in the market nor on the price of the shares."

A senior equity analyst at a top-tier brokerage firm, on condition of anonymity, told The Business Standard on Sunday that he believes the parent company's divestment is next to obvious, and he learned that an Indian and a local construction material giant are in the shortlist of buyers.

Since the sales receipt against 58.87% LafargeHolcim shares being held by the foreign parent company would be converted to foreign currency and repatriated to Europe, the local buyer would not be appreciated much by the Bangladesh government as it is desperate to conserve foreign currencies nowadays.

On the other hand, if any foreign buyer pays for the parent company's stake, it would not affect Bangladesh's foreign currency reserve, the analyst said.

Later, it might also be revealed that two buyers have teamed up, he added. 

Echoing him, two investment bankers, seeking anonymity, said LafargeHolcim on a proactive basis has removed a number of documentation barriers within the central bank, and they interpreted it as a ground preparation to facilitate the divestment.

Another analyst attributed the rise in LafargeHolcim's share price to the recent industry update of a double-digit price hike of cement that might help companies pass on the soaring costs.

Unlike its competitors, LafargeHolcim sources its main raw material limestone from its own mines at Meghalaya, India which is carried to its Chatak, Sylhet factory through its own conveyor belt.

Surma Holdings' stake in LafargeHolcim is valued at over Tk5,000 crore or at around $500 million based on Sunday's DSE closing price of Tk76.1 per LafargeHolcim share.