The European Commission has signed off on Cement Australia’s acquisition of BGC Cementitious assets as the transaction moves closer to completion.
In a note published on March 17, the European Commission announced its findings on the proposed transaction after it received notification of the deal on February 12.
Cement Australia, which is jointly controlled by Holcim Australia and Heidelberg Materials Australia, announced its intention to acquire certain assets of BGC Group, BGC Cementitious, late last year.
After it reviewed the deal, the European Commission has decided it does not oppose it, according to its release.
“The European Commission has concluded that the notified operation falls within the scope of the Merger Regulation and of paragraph 5(a) of the Commission Notice on a simplified treatment for certain concentrations under Council Regulation,” the European Commission posted.
“For the reasons set out in the Notice on a simplified treatment, the European Commission has decided not to oppose the notified operation and to declare it compatible with the internal market and with the EEA Agreement.”
Next Steps
This moves the transaction one step closer to approval. One of the remaining steps is the Australian Competition and Consumer Commission (ACCC) updates, which are expected to be released in May.
The ACCC commenced an informal review on February 11 under the informal merger review process guidelines. Submissions for the review closed on February 25.
May 1 has been proposed as the potential date for the ACCC’s findings, which may come as a final decision or the release of a statement of issues.
Under consideration
According to the ACCC update, the review considers the impact of the proposed acquisition on competition. Submissions were received on how closely BGC, Holcim and HMA compete in Western Australia’s aggregates and ready-mix concrete market, the potential impact of the potential acquisition on the price and service quality of aggregates, cement, ready-mix concrete and asphalt and whether customers would also have “sufficient alternative suppliers” for aggregates, cement ready-mix concrete and asphalt if the proposed acquisition went ahead.
Also, under consideration in the ACCC’s review is Cement Australia’s proposed divestiture of the BGC Wangara RMX plant (in greater Perth). The divestment has been proposed to address “potential competition issues”. Under this proposal, the Wangara RMX plant will go to an ACCC-approved buyer after the acquisition is completed.
The ACCC update shared details on the proposed structure. Under the proposed transaction structure, BGC Cement would be acquired and operated by Cement Australia. BGC Quarries and BGC Asphalt would be acquired and operated by a 50-50 new joint venture, which HMA and Holcim would control.
Holcim and HMA would divide eight of BGC Concrete’s ready-mix concrete sites. As part of this, Holcim would gain the Quinns Rocks, Canning Vale, Hazelmere and Mandurah sites, while HMA would obtain the Armadale, Kwinana, Bassendean and Moora. The BGC Wangara site would be divested as part of an undertaking by Cement Australia.
“The ACCC has not yet decided whether this type of undertaking, or any undertaking at all, would be capable of addressing any competition concerns arising from the proposed acquisition. The ACCC may consult on the specific terms of a proposed undertaking as its review progresses,” the ACCC noted in its letter.
Attractive market
When details of the transaction first emerged late last year, Holcim and Heidelberg Materials cited the ability to grow their market presence in Western Australia through this acquisition.
“The acquisition of BGC complements and expands our growing business in Australia, marking an important strategic step to further strengthen our existing footprint in this attractive core market,” chairman of the managing board of Heidelberg Materials Dr Dominik von Achten said at the time.
According to Holcim’s release at the time, Cement Australia would gain a “state-of-the-art” cement grinding station with significant annual capacity, a transport fleet and a nationally accredited innovation centre.
“The acquisition of this division of family-owned BGC will reinforce Holcim’s footprint in the attractive market of Australia. With its state-of-the-art facilities, the acquisition will advance Holcim’s leadership in sustainable and innovative building solutions,” Cement Australia chairman and Holcim region head AMEA Martin Kriegner said.
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