Malayan Cement Berhad entered into an agreement with its parent company YTL Cement Berhad, a subsidiary of YTL Corporation Berhad, for the purchase of its entire cement and ready-mixed concrete operations in Malaysia for a total consideration of RM5.158 billion. Under the agreement, MCB will acquire 12 companies involved in cement and ready-mixed concrete businesses, as well as marketing and plant management activities.
The total consideration of RM5.158 billion will be settled via RM2.0 billion in cash, RM1.408 billion through the issuance of new ordinary shares and RM1.75 billion through the issue of new irredeemable convertible preference shares (ICPS) in MCB. YTL Cement acquired MCB in 2019, premised on the potential synergies that would arise from the integration of businesses between the two groups. Since the acquisition in 2019, the two groups have made significant strides in streamlining their operations and maximising efforts on their logistical, distributional and marketing fronts.
This proposed transaction is the natural progression towards increasing the size of MCB’s cement and ready-mixed concrete businesses, bolstering its profitability and enhancing its value. YTL Cement will consolidate similar operating businesses under a singular umbrella. This is expected to further improve operational efficiencies and business outcomes. By leveraging shared expertise, experience, and resources, MCB aims to eliminate overlapping functions whilst continuing to deliver seamless solutions to customers, achieving economies of scale, and enhancing their market presence.
The partial settlement of the consideration through the issuance of new shares and ICPS rather than wholly in cash is intended to enable MCB to optimise its cash reserves and gearing levels. The strategic realignment will foster value creation for shareholders of MCB and allow investors to invest directly on a focused basis in Malaysia’s leading building materials company. This exercise will also significantly reduce related party transactions and conflicts of interest between MCB and YTL Cement. The intention is to improve governance across both groups and lower the administrative and compliance costs incurred through the monitoring and management of these issues.
List of companies to be acquired by MCB includes Cement Perak-Hanjoong Simen Sdn Bhd, Pahang Cement Sdn Bhd, Straits Cement Sdn Bhd, Slag Cement Sdn Bhd, Slag Cement (Southern) Sdn Bhd Ready-mixed concrete Buildcon Concrete Sdn Bhd, Buildcon-Cimaco Concrete Sdn Bhd, CI Readymix Sdn Bhd, Mini-Mix Sdn Bhd, SMC Mix Sdn Bhd