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Votorantim Cimentos eyes NYSE listing in prospective $5.4 billion IPO

Sources: Votorantim Industrial S.A., São Paulo; CP staff

The ultimate parent company of Toronto-based Votorantim Cement North America (VCNA) has outlined acquisition and management strategies to follow an initial public offering for shares of its multinational cement, concrete and aggregate business, Votorantim Cimentos S.A., trading on the São Paulo Stock Exchange and New York Stock Exchange.

In a U.S. Securities and Exchange Commission registration statement and preliminary prospectus, Brazilian conglomerate Votorantim Industrial S.A. profiles Votorantim Cimentos’ vertically integrated operations. VCNA spans five cement and two grinding mills, 140 ready mixed concrete plants, plus 34 aggregate and four limestone sites. It operates under the Prairie Material, St Marys and Superior Materials brands in Great Lakes markets, plus Prestige Concrete and Suwannee in Florida.

Specific to North American acquisition or investment opportunities, the prospectus notes, “We will select companies or assets with potential to improve their operating and financial performances and generate synergies with our existing clusters.” In the U.S. and Canada, a publicly traded Votorantim Cimentos would “focus efforts on maximizing the benefits from expected market recovery, and expect to further improve the utilization rates of our [cement] plants as higher sales volume reduce our fixed costs per ton sold.”

VCNA accounted for $869 million, or 18.7 percent, of the parent company’s $4.64 billion in 2012 revenues, the balance from strong cement market positions in Brazil, Argentina and Chile, and smaller stakes in neighboring South America countries, plus Spain, Turkey, India, Tunisia and Morocco. The Votorantim Cimentos portfolio encompasses 34 cement and 22 clinker grinding mills; 328 ready mixed and 13 mortar plants; plus, 84 aggregate and 61 limestone operations.

The company is a key unit of the privately-held Votorantim Industrial, which reported 2012 sales exceeding $12 billion. The Votorantim Cimentos IPO will have a proposed $5.4 billion maximum, Votorantim Industrial retaining majority shareholder status. “We believe we are uniquely positioned to maintain high returns on capital and generate significant value for our shareholders,” the prospectus states. “We intend to expand our operations internationally through a vertically integrated platform and footprint in high-growth markets. We will further maintain our track record of achieving cost efficiency through disciplined cost management policies and by leveraging our know-how and industry-leading technical expertise.”

An IPO is pending SEC and Brazilian authority clearance. Votorantim Cimentos would join Cemex S.A.B de C.V. and CRH Plc as multinational heavy building materials companies with dual listings on the lead exchanges in their home bases and the NYSE. Trading on the latter would be through American Depositary Receipts (ADR). Each Votorantim Cimentos ADR would represent a unit comprising one common and two preferred shares. The IPO would bring a new cement and concrete operator to the NYSE, which since 2005 has seen the acquisition-driven delisting of Florida Rock Industries (Vulcan Materials) and Lafarge North America (Lafarge Group) shares and Hanson Plc (Heidelberg Cement) and Rinker Group (Cemex) ADR.