Aveng's about-turn just proves nothing is cast in cement
April 24, 2007

  By Quentin Wray

The decision by Aveng, South Africa's biggest construction and engineering company, to sell its entire shareholding of almost 46 percent in cement producer Holcim South Africa is an intriguing apparent change of heart.

Aveng refused to elaborate on its announcement yesterday to exit from its investment in Holcim SA, stating that it considered it inappropriate to do so until the detailed shareholders circular had been received by its shareholders.

Analysts confirmed they were surprised by the announcement.

However, chief executive Carl Grim, who only last week vowed Aveng would not allow an important asset such as Holcim SA to be stolen from its shareholders, confirmed that these shareholders were achieving fair value and the deal enabled a significant black economic empowerment (BEE) transaction in the cement sector.

But more telling is Aveng's admission that its strategy was to achieve operational control over, or have a controlling interest in, all its major investments. An explanation has not been forthcoming on why the transaction, which was initially expected to be concluded by the end of last year, has taken so long.

It's likely the delay was caused by Aveng's refusal to waive its pre-emptive right to acquire the shares Holcim wished to sell in a bid to acquire a controlling interest in Holcim SA, which would also make it the deal breaker.

What made Aveng relent is unclear but it was certainly facing all sorts of pressure, including from President Thabo Mbeki late last year, when he sang the praises of Holcim's proposed BEE deal.

Analysts expect Aveng's decision to dispose of its investment in Holcim SA to be supported by the market. They claim Aveng could very effectively use the cash from the deal to take advantage of the many opportunities available in the construction sector.

Source: http://www.busrep.co.za/index.php?fSectionId=553&fArticleId=3796839