CRH to face contest in Egyptian bid

Building materials group CRH is interested in bidding for control of one of Egypt's biggest cement companies, Helwan Portland Cement, but will have to compete against at least two other firms.

Last week, CRH said it was willing to offer 55 Egyptian pounds (€14.19) per share for Helwan, although the Portuguese company Secil, has also indicated that it is willing to pay this price for Helwan. At 55 pounds per share, Helwan in its entirety is valued at around €500 million (£394 million).

A spokesman for the state-owned Holding Company for Mining and Refractories said that it had received two faxes from CRH and Secil last Thursday asking if they could submit offers of 55 pounds per share. Until CRH and Secil had indicated interest in Helwan, the only offer for the Egyptian company was a 51.10 pounds per share offer from the Arab Swiss Engineering Company. ASEC has also indicated that it wants to buy all of Helwan, which is 47.9 per cent owned by the Egyptian state.

Analysts said that offers from wholly foreign-owned companies might be treated more favourably than ASEC. "As an Egyptian company, ASEC does not comply with the government's goal of attracting foreign direct investment through privatisation," HC Securities said. ASEC is 51 per cent owned by five partially state-controlled cement firms, with the Swiss firm MET owning the other 49 per cent.

Helwan operates from two sites in Cairo and Smalote City and its product lines include portland cement, rapid-hardening cement, sulphate and seawater-resistant cement, blast furnace cement and low heat cement. Last year, Helwan had sales of 582.6 million pounds (€150 million), down 5 per cent on 1999, and earnings before interest, tax and depreciation (EBITDA) of more than 177.2 million pounds (€46 million), up 3 per cent on the previous year. More recently in the half-year to the end of June, Helwan reported a fall in net profits from 105.6 million pounds (€27 million) to 96.4 million pounds (€25 million).

This is the second time in recent months that CRH has shown an interest in expanding into the Egyptian cement market. In June, it lost out to French group Ciments Francais for a 25 per cent stake in Suez Cement which cost around €160 million.

The Middle East seems to be one of CRH's prime targets for expansion. Apart from tabling two bids for companies in Egypt, it has also bought a 25 per cent stake in Nesher Cement, the only producer of cement in Israel and Palestine.