Cemex will continue to operate its plants in Croatia after European Union regulators rejected the planned sale of the business to a joint venture between Germany’s HeidelbergCement and Schwenk Zement.
Cemex agreed to sell its Croatia operations to Duna-Drava Cement in 2015 for around $245m, part of the asset-sale program with which it has significantly lowered debt in recent years.
Cemex said Wednesday that the deal will not close, and it will continue to run the business which includes three cement plants, seven concrete plants, two aggregates quarries and terminals in Croatia, Bosnia-Herzegovina and Montenegro.
“Our asset-sale program to speed up our debt-reduction has been a success…by that I mean that it was slightly bigger than we had expected and at greater prices than we had expected, so if the Croatia part weren’t to work out, it’s no big deal,” Fernando González, chief executive, Cemex said last week at a press conference. “We don’t foresee any new asset-sale program.”
The European Commission said it had “strong concerns” that the takeover would have reduced competition in cement markets and increased prices in Croatia, and that the buyers failed to offer a remedy that addressed those concerns, such as offering to sell an existing cement business.
It noted that Cemex is the biggest cement producer in Croatia, while Duna Drava and HeidelbergCement are the biggest cement importers.
“The takeover would have eliminated competition between companies that were competing head-to-head for the business of Croatian cement customers and could have led to a dominant position in the markets,” the commission said.