Cemex to sell Gresik stake: Govt

Cemex to sell Gresik stake: Govt

Bloomberg, Jakarta

Cemex SA, the world's third-biggest cement maker, agreed to sell its minority stake in PT Semen Gresik, ending a seven-year effort to acquire the Indonesian company, Indonesia's top economics minister said.

"They agreed to sell their stake in Semen Gresik a couple of months ago," Coordinating Minister for Economic Affairs Aburizal Bakrie said on Monday.

Francisco Noriega, chairman of Cemex's Indonesian unit, declined to comment. Some analysts such as Gonzalo Fernandez of Santander Central Hispano Investment in Mexico City said they were skeptical Monterrey, Mexico-based Cemex had concluded talks to sell its 25.5 percent stake in Gresik.

The holding has a market value of Rp 2.42 trillion (US$255 million).

"The information coming out of Indonesia many times is inexact," said Fernandez, who has a buy rating on Cemex. "I would take it with reserve."

Cemex could use proceeds from selling its stake in the Gresik, Indonesia-based company to pay part of the $5.8 billion it borrowed to acquire RMC Group Plc. in March.

The company has sold two cement plants in the U.S. and a stake in a Chilean cement maker this year to pay debt.

"If Cemex sells Gresik at a good price and it's applied to debt reduction, that would be good news for Cemex," Fernandez said.

Cemex bought the stake starting in 1998 as part of an agreement to acquire a controlling holding, which was stalled by political opposition in Indonesia in 2001.

The purchase of RMC, which had its largest operations in Europe and the U.S., will double Cemex's annual sales to about $16 billion and make the Mexican company the world's largest producer of ready-mix concrete.

Cemex Asia Holdings Ltd., a unit of Cemex, filed a petition with the International Center for Settlement of Investment Disputes in 2003, demanding Indonesia honor the agreement to sell a controlling stake in Semen Gresik.

The Mexican cement maker bought the stake four months after President Suharto was forced out of office following the Asian financial crisis that triggered violent street protests.

Cemex's rival HeidelbergCement AG, Germany's largest cement company, controls PT Indocement Tunggal Prakarsa, Indonesia's second-biggest maker of the building material by sales. Holcim Ltd., the world's second-biggest cement maker, controls PT Semen Cibinong, Indonesia's No. 3 maker of the material.