The Buzzi Unicem enters the market of UAE. through its subsidiary TC Mena Holdings Ltd, acquired 37,6% of Gulf Cement Co. (GCC), a company listed on the Abu Dhabi Stock Exchange and based in the United Arab Emirates. Also yesterday TC Mena has launched a takeover bid on the remaining shareholders of GCC, offering AED 0,56 per share, with results expected on 11 April 2025.
Business Square rewards the operation with a 4,30% increase in the stock price to 52,15 euros.
If the acquisition is completed, the total cost for 100% will be about 65 million, financed entirely with own resources and lines of credit.
Who is Gulf Cement Company
Gulf Cement Co. operates a cement plant in Ras Al Khaimah with an annual production capacity of approximately 2,4 million tons (6% of Buzzi's production capacity without taking into account Mexico). In 2024, the newly acquired company recorded a turnover of 120 million euros (3% of Buzzi's) and an ebitda of 7 million (0,5%).
Analysts approve
Although it is a small deal, Buzzi, by paying a low price (just over 30 euros per ton), secures entry into an uncovered geographic market that could be at the bottom of the cycle, thus offering significant recovery opportunities, Websim analysts note. Furthermore, greater operating efficiencies could lead to significant improvements in terms of margins. Finally, the plant has access to the port and therefore could be used for export by ship.
The price of the takeover bid, says Equita, implies a 100% valuation of the company equal to 65 million euros with an implicit ev/ebitda multiple on the 2024 numbers of 11, "but which we think could drop rapidly in light of the company's production capacity". The operation is financed with its own funds with Buzzi having 2024 million euros of net cash at the end of 755. It is a small acquisition, but it is interesting given Buzzi's entry into a new market that offers interesting development opportunities, we are thinking above all on exports and which benefits from particularly low energy costs" says Equita which also appreciates the greater activism on the use of net cash, expected in the area of 1,3 billion in 2025 (13% of Buzzi's market capitalization) with this deal that follows the acquisition of the Brazilian business and the 200 million buyback. Equita has a target price of 47 euros with a buy rating on the stock.
Banca Akros raised its 2026 EBITDA estimates for Buzzi by around 7% to take into account the €500 billion special infrastructure fund announced in Germany. “We note that Germany accounted for 15% of the group’s 2023 EBITDA and we expect the fund to support the cement market in the country, reducing the downside risk on margins in the medium term. We therefore increase our target price on the stock from 43 to 50 euros and we confirm our neutral recommendation. At the target price, the stock would trade at a 2026 price/earnings multiple of 10,4, higher than the average of the last 7 years of around 9", Banca Akros specifies.
