Zamil and GIG enter talks over insulation merger
Manufacturing groups explore production link-up to capture demand
Zamil Industrial Investment Company is in talks with Gulf Insulation Group over a possible merger of parts of their insulation businesses, according to the company.
The Damman-based manufacturing conglomerate – which contains business lines in steel, glass, mirrors and air conditioners – informed the Saudi stock exchange of the discussions yesterday.
The company is keen to exploit the regional market potential for insulation, and the announcement follows the approval of the Zamil board of a SR300 million investment into a new factory to produce Stonewool insulation products.
The companies said they had signed an Indicative Term Sheet on 20th September as a precursor to the merger plans. A due diligence exercise will be conducted by both parties during the same period.
“Should the merger take place, the revenue of this merged company is expected to be in the range of SAR 800 million in 2011,” the company stated, adding that Zamil will have a 51% controlling stake of the new venture.
Last month Zamil Industrial revealed that it was to turn two subvsidiaries - Zamil Steel and Zamil Air Conditioners - into limited liability companies, a move analysts say will help give greater clarity to these businesses' contributions to the overall group.
Meanwhile, Aluminium Bahrain BSC (Alba) is planning an initial public offering by the end of the year in line with the company’s capacity expansion, according to its chairman
Mahmood Hashim Al Kooheji told Bloomberg yesterday of the plans though did not disclose the size of the offering or its value. It follows the company announcement in June to go public.
Proceeds from the offering will go to shareholders, he said Al Kooheji said in an interview in Manama, Bahrain.
“We are doing this as part of sharing the wealth with the people of Bahrain,” Al Kooheji told the newswire. “Once we get listed, we will be the biggest market-cap company on our stock exchange.”
Laurent Schmitt, CEO, said the company plans to add 400,000 tonnes of capacity to its 850,000 smelter, with construction of the expansion to begin at the end of a feasibility study, likely to be finalised at the beginning of 2011.