Sales of Hyundai Cement Co., the seventh largest in domestic industry, could fetch as much as 600 billion won ($514 million), given high demand from both cement makers and private equity funds.

According to investment bank industry sources on Thursday, the preliminary bidding scheduled for December 16 on Hyundai Cement is expected draw multiple bidders including the country’s major cement manufacturers and PEFs. Market experts predict the bid price to reach 600 billion won.

Over 90 percent of Korean cement market is shared among seven major players, and whoever wins Hyundai Cement that accounts for 7 percent will gain an advantageous position in the industry.

Among the local cement firms, Ssangyong Cement Industrial Co. Tongyang Cement & Energy Co., and Lafarge Halla Cement Corp. whose production bases are located at coastal regions would benefit most if any of the three takes over Hyundai Cement with its manufacturing site at the inland of the country.

Ssangyong Cement Industrial taken over by Seoul-based PEF Hahn & Co. earlier this year and Lafarge Halla Cement bought out by a consortium of home-grown Glenwood Private Equity and Hong Kong-based PEF Baring Private Equity Asia are expected to bid for Hyundai Cement.

Halla Cement is reportedly preparing a solo bid.

Sampyo Corp. who became the new owner of Tongyang Cement & Energy last year is anticipated to enter the auction jointly with financial investors including restructuring specialist United Asset Management Company (UMACO).

Other major PEFs including IMM Private Equity also are deliberating entry.

Based on sales value, Hyundai Cement stands as Korea’s seventh largest cement manufacture with roughly 7 percent share. But the fate of the cement maker will likely be a game changer for the Korean cement industry as the country’s top seven cement companies account for more than 90 percent of the local cement market while the No. 1 and 2 - Ssangyong Cement Industrial and Hanil Cement Co. tightly control the market with 29 percent share and 21 percent share, respectively.

Hyundai Cement last year posted 52.5 billion won in operating profit on sales of 363.1 billion won, up 8.2 percent and 11.5 percent, each, from the previous year. Its operating profit for the third quarter ended September 30 this year recorded 39.3 billion won on sales of 275.7 billion won.

The Hyundai Cement sale deal is jointly led by state-run Korea Development Bank, Hana Financial Investment Co.’s M&A team, and Samil PricewaterhouseCoopers.

By Kang Doo-soon and Chun Gyung-woon

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]