Huaxin Building Materials Group (06655): Huaxin Central Asia Investment (Wuhan) has signed a "Share Purchase Agreement" with Holderfin B.V.

Huaxin Building Materials Group (06655) announced that on August 1, 2026, the buyer, Huaxin Central Asia Investment (Wuhan) Co., Ltd., signed a "Share Purchase Agreement" with the seller, Holderfin B.V. Accordingly, the seller conditionally agrees to sell, and the buyer conditionally agrees to purchase the equity of the core target company indirectly and directly held by the seller, in compliance with and pursuant to the terms and conditions of the "Share Purchase Agreement." The transaction is conducted in two phases: the first phase (this transaction), based on a valuation of $780 million corresponding to 100% equity in the core target company, involves the acquisition of a 67.623% stake in the core target company through the indirect acquisition of equity in three holding companies, with a purchase price of approximately $527 million (which will be adjusted based on the cash, debt, non-trade receivables, and working capital situation of the core target company at the time of closing, following a delivery report mechanism); the second phase, after three years, allows for the acquisition of the remaining 31.377% stakes directly held by the seller through the buyer's exercise of a subscription option or the seller's exercise of a put option, with the corresponding price being the latest audited annual revenue of the core target company (excluding revenue increases from capacity expansion) multiplied by 2.4 times 31.377%, and not less than $280 million. The buyer is required to make a public offer to the other shareholders of the core target company after the completion of the initial acquisition in accordance with the requirements and directives of the Philippine SEC and relevant legal provisions. Upon completion of the acquisition, the target company will become a controlling subsidiary of the company, and its financial performance will be consolidated into the company's financial accounts. In this transaction, the buyer will acquire specific shares of the following three holding companies: A Clinco Corporation 99.9997% equity; B Cemco Holdings, Inc. 36.8038% equity; C Union Cement Holdings Corporation 27.51% equity. Through the acquisition of the above shares, the buyer will indirectly obtain a total of 67.623% of the issued share capital and voting rights of Holcim Philippines Inc., the core target company. The payment will be made in cash by the buyer, expected to be funded from the group's own funds and external financing such as bank loans and bond issuance. Although this transaction is a related party transaction, it is still an asset optimization configuration conducted by the company's largest shareholder, Haorui, due to Huaxins excellent technology and supply chain integration capabilities, and is beneficial to the development of Huaxin's overseas business and the expansion into new markets. Over the past decade, overseas development (including new construction or acquisition) has been one of the companys key strategies. The company has a good track record in successfully integrating and developing acquired companies, achieving performance improvements post-acquisition, and realizing returns on overseas investment targets. There are two major benefits to overseas development: first, this strategy enables the company to leverage its talent pool and accumulated expertise and capabilities in industrial technology and production chain integration for growth; second, it effectively counteracts the negative impacts of declining domestic market demand. Currently, the company operates in 14 countries overseas, with clinker production capacity reaching 26.6 million tons per year and cement grinding capacity reaching 36.15 million tons per year. From January to June 2026, the companys overseas cement and clinker sales reached 13.18 million tons, a year-on-year increase of 57%, with sales revenue of 8.542 billion yuan, a year-on-year increase of 107%. As the domestic cement business faces severe challenges, the overseas business has become a significant contributor to the companys performance. The target company is located in the Philippines, which has a population of over 110 million, abundant labor resources, high private consumption as a share of GDP, and robust domestic demand. The country's GDP has maintained stable growth of over 5.5% in recent years, with continuous expansion in infrastructure and steadily releasing demand for cement consumption; the cement industry has ample long-term growth potential. The per capita cement consumption in the Philippines is at a relatively low level, approximately 290 kg. The core target company has laid out four integrated cement clinker plants and one cement grinding station in the key areas of Luzon and Mindanao in the Philippines, with an annual clinker production capacity of 5.2 million tons and an annual cement production capacity of 9 million tons, possessing abundant limestone resources and favorable location advantages, with considerable potential for technology and management optimization following the acquisition. The group has deepened its presence in the overseas building materials market and accumulated extensive experience in overseas cement mergers and integrated operations. It possesses strong competitive advantages in production technology, cost control, supply chain management, and marketing. Upon completion of the acquisition of Philippine assets, the company will be able to implement a mature management system and advanced production processes, continuously optimizing the target capacity utilization rate, reducing overall operating costs, fully tapping into the targets performance growth potential, and ensuring good returns on this overseas investment; at the same time, this acquisition will also improve the company's industrial layout in Southeast Asia, further expand global capacity, and enhance the company's influence in international markets and its ability to operate through economic cycles. Moreover, the original shareholder Haorui will continue to hold a certain stake in the Philippine assets for a period of time, contributing significantly to the continuity of the brand. The company has established an independent board committee composed of all independent non-executive directors (Mr. Huang Guanjiao, Mr. Zhang Jiping, and Mr. Jiang Hong) to consider whether the terms of the "Share Purchase Agreement" and the proposed transaction thereunder are conducted on normal commercial terms, fair and reasonable, and in the overall interests of the company and its shareholders, and to provide recommendations to independent shareholders on this matter. Maishi Capital has been appointed by the company as an independent financial advisor to provide opinions to the independent board committee and independent shareholders on whether the terms of the "Share Purchase Agreement" and the proposed transaction are conducted on normal commercial terms, fair and reasonable, and whether they are in the overall interests of the company and its shareholders.