CEMEX of Mexico is expected to announce the US$350m sale of its 25 per cent stake in Semen Gresik, Indonesia's largest cement company, to a local group in a deal that will bring a dispiriting end to its efforts in south-east Asia's largest economy.
People close to the transaction said late last month that the Mexican cement group, which has been battling for majority control of Gresik since 1998, had finalised details of a sale to Indonesia's Rajawali Group.
Both Rajawali and Gresik are understood to have approached officials in recent days to lay the groundwork for government approval.
They are shooting for a signing soon, one person close to the deal said. That timing, the person said, depended in part on whether the sales agreement is signed in Indonesia or in Mexico and on travel schedules.
The Indonesian group has been sitting on more than US$800m in cash since selling a majority of its Excelcomindo mobile phone business to Telekom Malaysia last year, people close to the transaction said. It is expected to team up with international private equity groups or hedge funds to buy the Cemex stake, they said, although who those foreign investors would be remained unclear.
People close to the deal said the Rajawali Group was unlikely to try to secure majority control of Gresik, something Cemex had been trying to do ever since it bought an initial 14 per cent stake for $115m in September 1998. Indonesia's government, which sold the initial stake to Cemex as part of an IMF-mandated privatisation programme, continues to hold 51 per cent of Gresik's shares.
Cemex would not comment.
The deal is likely to be seen as a disappointing end to a barriers facing foreign investors in Indonesia and the power that continues to be wielded by vested interests eight years after the fall of Suharto. The failure of President Susilo Bambang Yudhoyono and his government to bring an amicable end to the dispute is also likely to be a blow to his efforts to convince foreign companies to return to the country.
Cemex's exit would also come at a time when major international rivals are notching successes in Indonesia. Germifiy's Heidelberg Cement and Switzerland's Holcim have secured majority stakes in other major Indonesian cement producers with the latter announcing plans earlier this year to build a new $300m plant in east Java.
Lafarge, the French cement group, recently announced that it would be getting $30m in bridge financing from Citigroup to help rebuild its plant in Aceh province.
Under syndication arrangement with FE