Post by Crazy Mudder Trucker on May 18, 2008 19:56:48 GMT -5
TOKYO, May 5 (Reuters) - Mitsubishi Materials Corp (5711.T: Quote, Profile, Research), Japan's second-largest cement seller, said on Wednesday it would spend $900 million to take control of U.S. cement firm Robertson's Ready Mix, shrugging off the U.S. housing meltdown.
The deal to take majority control of the unlisted Californian firm is the latest of many consolidation moves in the U.S. sector, as companies such as Mexico's Cemex (CX.N: Quote, Profile, Research) and Japan's Taiheiyo Cement Corp (5233.T: Quote, Profile, Research) seek to integrate cement production with downstream operations including concrete.
While the U.S. housing slump has hit construction, Mitsubishi Materials said it saw a recovery after this year and other cement markets were still showing stable growth.
"Although the U.S. housing market is in a slump due to subprime-related problems, the housing market accounts for around 25 percent of U.S. cement demand. Public-works demand, the majority of cement demand, is expected to show stable growth," the company said in a statement.
Mitsubishi, which already generates a fifth of its recurring profit, or around 20 billion yen ($187 million), from its U.S. cement business, said it would buy shares from the founding family of Robertson's Ready Mix to raise its holding to 7O percent from 33.3 percent.
The aim was to sell more cement to the largest cement firm in southern California and to raise its U.S. subsidiary's recurring profit, which is before tax and extraordinary items, by 5 billion yen ($46.8 million), a Mitsubishi spokesman said. Mitsubishi Materials, Japan's top nonferrous metal smelter, is focused on copper and other metal products, along with cementRobertson's Ready Mix has seen its profit grow more than fourfold in the last three years, Mitsubishi Materials said..
The deal to take majority control of the unlisted Californian firm is the latest of many consolidation moves in the U.S. sector, as companies such as Mexico's Cemex (CX.N: Quote, Profile, Research) and Japan's Taiheiyo Cement Corp (5233.T: Quote, Profile, Research) seek to integrate cement production with downstream operations including concrete.
While the U.S. housing slump has hit construction, Mitsubishi Materials said it saw a recovery after this year and other cement markets were still showing stable growth.
"Although the U.S. housing market is in a slump due to subprime-related problems, the housing market accounts for around 25 percent of U.S. cement demand. Public-works demand, the majority of cement demand, is expected to show stable growth," the company said in a statement.
Mitsubishi, which already generates a fifth of its recurring profit, or around 20 billion yen ($187 million), from its U.S. cement business, said it would buy shares from the founding family of Robertson's Ready Mix to raise its holding to 7O percent from 33.3 percent.
The aim was to sell more cement to the largest cement firm in southern California and to raise its U.S. subsidiary's recurring profit, which is before tax and extraordinary items, by 5 billion yen ($46.8 million), a Mitsubishi spokesman said. Mitsubishi Materials, Japan's top nonferrous metal smelter, is focused on copper and other metal products, along with cementRobertson's Ready Mix has seen its profit grow more than fourfold in the last three years, Mitsubishi Materials said..