Bestway shelves plan to acquire Dewan Cement

KARACHI: Bestway Cement Limited on Friday announced it has shelved its plan to acquire north plant of Dewan Cement Limited, citing some legal hiccups and clearly leaving a room for other local players or a Chinese entrant to join forces with a key cement maker.

“As a result of delay and uncertainty resulting from recent legal proceedings initiated in the Sindh High Court, Bestway Cement Limited has decided not to proceed with the acquisition of the north plant of Dewan Cement Limited located at Kamilpur, near Haripur, Khyber Pakhtunkhwa,” the company said in a notice issued to the Pakistan Stock Exchange. 

It didn’t specify the causes of its decision, which it was brought to the public notice in December last year when it informed the bourse of its intention in the takeover. 

In February, Bestway Cement, part of the Bestway Group of the United Kingdom, signed a non-binding memorandum of understanding to acquire Dewan Cement’s production facility, mining leases/licences and inventories, stores and spares in the province.

The company had, however, clarified that the acquisition would be subject to the receipt of all relevant corporate, regulatory and creditor consents and approvals.

Dewan Cement has an annual production capacity of around 2.88 million tonnes, constituting 6.1 percent of the total installed capacity of 45.6 million tons of the cement industry. It has two manufacturing units, including Pakland Cement and Saadi Cement. 

Lucky Cement, Fecto Cement, and a Chinese firm have also expressed their interest in Dewan’s north plant. Construction sector, the biggest consumer of cement, posted an impressive growth of 13 percent in the fiscal year of 2015-16 compared to an average of four percent in past four years. 

Local cement industry is massively investing in capacity enhancement in view of China-Pakistan Economic Corridor projects.They planned to increase production capacity by 26 to 28 million tonnes to 72 million tonnes plus within the next two to three years.

The industry dispatched 30.304 million tonnes during July-March 2016/17 – the highest-ever dispatches recorded in such a period – depicting 6.90 percent. The capacity utilisation, during this period, was 87.1 percent.