December 17, 2015 / 9:40 AM / 5 years ago

Turkey's Limak Cement plans up to 1 bln euro African acquisition

ANKARA (Reuters) - Turkey’s Limak Cement is in talks on the acquisition of cement operations in Africa which could be worth up to 1 billion euros ($1 billion), a senior executive told Reuters, though there was no certainty a deal would be agreed.

A factory worker rolls bags of cement at the East African Portland factory in Athi River near Kenya's capital Nairobi August 18, 2011. Kenya's East African Portland Cement is worried rising production costs will shrink profit this year as it seeks to raise capital through a bond or rights issue for expansion into Uganda, its head said on Friday. Picture taken August 18, 2011. To match Interview EAPCC REUTERS/Noor Khamis (KENYA - Tags: BUSINESS) - RTR2Q3P9

Limak, which already has interests in Mozambique and Ivory Coast, has signed a confidentiality agreement regarding the purchase from an international cement company, the executive said, though the outcome of the talks would not be known for several months.

In an interview with Reuters, Limak Cement Group General Coordinator Gultekin Aksuyek did not say who it was looking to buy the assets from but said it had operations in more than one African country.

“A global cement firm is considering selling its facilities in three African countries... We are seriously interested and have signed a confidentiality agreement,” Aksuyek said. “I think we will know in five to six months.”

He added Turkish companies had ground to make up in the continent which had good growth opportunities. “As Turkish companies, we were very late in penetrating the African market,” Aksuyek said, adding that an unnamed bank was positive about financing the acquisition.

Other overseas expansion plans were also in the works. “We are also studying a possible acquisition in one of Latin America countries,” Aksuyek added. “We may make an acquisition there in the next five years.”

Limak has 10 cement factories in Turkey and is building cement grinding and packaging facilities in Mozambique and Ivory Coast, which are expected to come online in 2016 and 2017, part of broader expansion plans by the group.

“As the cement arm of the holding, we decided to lead the group into Africa. Our energy arm is working on their plans for Mozambique and construction arm is considering Ivory Coast,” Aksuyek said, noting he expected Limak Cement’s sales volume to grow around 4 percent in 2016 to 8.8 million tonnes.

Among Africa’s major cement makers, Dangote Cement has an annual production capacity of 45 million tonnes. Other major players in Africa include Lafargeholcim, Germany’s Heidelberg and South African-based PPC.

($1 = 0.9208 euros)

Writing by Ece Toksabay; Editing by David Holmes

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