Indonesia, it is now Malaysia's turn. It is reported that LafargeHolcim has signed an agreement to sell its 51% stake in Lafarge Malaysia to YTL Cement for 3.96 US $billion. (Editor's Note: YTL is a building materials company operating in Asia, with cement plants in Malaysia, Myanmar, Vietnam, China and other places.). The deal includes three integrated cement plants and two grinding plants. In addition, Lahau has signed an agreement with YTL Cement (Singapore) to sell its 91% stake in Holcim Singapore.
First of all, to introduce the background, Lahao plans to divest assets worth 1.7 billion euros in 2019, which should be the second one. The scale of this transaction is totally different from that of Holcim Indonesia, which was just completed in February 2019. Holcim Indonesia's trading assets involve four cement plants, 33 mixing plants and two aggregate plants. Malaysia was sold again, continuing the trend of Lahau leaving Southeast Asia. What is
surprising is the location of the sale. All media speculation about where Lahau might sell next has focused on the Philippines, with unconfirmed potential buyers including Pacific Cement from Japan and Siam Cement from Thailand. Holcim Philippines is valued at about $2.5 billion, according to Bloomberg. With the growth of the industry, the local government's increased investment in infrastructure construction, and the ban on imports, it seems unlikely that Lahao will withdraw from the Philippines without a sufficient price or a long-term downturn in the market.
Besides, the selling price is also puzzling. Based on 51% equity, the price per ton is only $60, which is only 1/2 of the price of Lahao Indonesia, and the price per ton of Lahao India looks very low.
Figure 1: 2011-2016: Malaysian cement production capacity (in millions of tonnes) and capacity utilization 
Source: Cement and Concrete Association
of Malaysia Data from the Cement and Concrete Association of Malaysia shows that overcapacity seems to be the culprit again. The capacity of the local cement industry fell to a low of 59% in 2016. Cement production and consumption peaked in 2015 and then declined. Lafarge Malaysia's sales revenue is also declining year by year. Malaysia's cement production capacity is comparable to that of the Philippines, but its population is almost one third of that of the Philippines, and Malaysia's per capita cement production capacity is relatively high. In addition, there may be their own reasons, such as debt levels, old machinery, resulting in low valuation.
In any case, this could pose a hurdle for YTL Cement as it adapts to new markets. Considering that the acquisition may bring it to more than 50% of Malaysia's production capacity, it may not be smooth sailing. Recently, the Malaysian government announced that Lafarge Malaysia has resumed the supply of cement to the East Coast Railway Line, a major infrastructure project. If the transaction is approved and passed quickly, YTL Cement will benefit from the transaction and consolidate its new position as a market leader.
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