Cemex exits Semen Gresik for $337 million

An Indonesian conglomerate, the Rajawali Group, agrees to purchase a stake in a local cement plant, ending years of problems for an Mexican firm trying to do business in Indonesia.
The Rajawali Group has agreed to purchase Mexican cement conglomerateÆs Cemex SA's stake in PT Semen Gresik for $337 million.

After years of battling with the Indonesian government, Cemex, the world's third largest cement producer, said in a statement on May 4 that it would sell its 24.9% stake in SG to Rajawali, pending approval from the government.

The shares were sold at $2.28 each, or a 28% discount to their closing price that day on the Jakarta Stock Exchange.

JPMorgan was the financial advisor and placement agent to Cemex on the sale, which the Mexican company characterised as part of its ôwider strategy of divesting assets without a majority stakeö.

CemexÆs battles with the government are the sort that spook foreign investors. It had been left with a minority stake in Semen Gresik in 1998 after the government declined to give Cemex control of the company. Cemex had been willing to pay more than $500 million to raise its stake to 51%, and thus control the plant, but PT Semen Padang, which makes a third of Semen Gresik's cement, put a stop to the deal - by trying to transfer ownership of the unit to the West Sumatra government. A few months later, in November of 2001, the West Sumatra government, under an autonomy law, seized control of Semen Padang to prevent the sale on the grounds that it was a strategically important industry. And legal wrangles ensued ever since.

The new owners are less-likely to run into problems with the local administration as Indonesian businessman Peter Sondakh owns the trading company Rajawali. The company is certainly diversified, with investments ranging from tobacco, taxi companies to hotels and department stores. The group co-founded the country's first private TV station, RCTI, and the country's first privately-owned cellular telecommunications operator, PT Excelcomindo Pratama. It has also been credited with turning around loss-making cigarettemaker, PT Bentoel.

Semen Gresik says its net profit for the first quarter of the year was Rp287 billion ($32.7 million), more than double the Rp115 billion in the same period last year. Thanks to reconstruction work in Aceh, net sales revenues improved by 38% to Rp1.94 trillion.
¬ Haymarket Media Limited. All rights reserved.
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