HeidelbergCement is reportedly exploring the potential divestment of some of its U.S. assets as the company looks to streamline its operations. Bloomberg has reported that people familiar with the matter, who preferred to remain anonymous due to confidentiality, have said that the sale of certain units could bring in around $1.5 billion.
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HeidelbergCement (UK:OMG2) has seen decreasing sales and delays in construction projects due to the coronavirus pandemic. The sale of its California assets would free up funds and allow the company to focus on the East Coast, Midwest and Canada.
HeidelbergCement’s Chief Executive Officer, Dominik von Achten, said in an interview with Germany’s Handelsblatt newspaper in October that the company plans to review its portfolio and discontinue operations in some markets that don’t have favorable prospects.
According to unnamed sources, HeidelbergCement’s advisers recently sent initial marketing material to potential buyers including Martin Marietta Materials Inc., Cemex SAB, CRH Plc, Summit Materials Inc. and LafargeHolcim Ltd., as well as other cement makers in emerging markets like China and Latin America. The company is expected to start receiving bids early next year, but could choose to keep the business if offers come in too low. (See UK:0MG2 stock analysis on TipRanks)
Jefferies analyst Glynis Johnson reiterated her Buy rating on the stock yesterday, maintaining a price target of €78 (27% upside potential). Johnson believes that Heidelberg is one of the cheapest stocks in the building materials space and sees the stock offering strong leverage to developed market residential and infrastructure growth as well as the stabilizing emerging markets.
Consensus among analysts is a Moderate Buy based on 9 Buys and 5 Holds. The average price target of €66.05 implies upside potential of around 8% over the next 12 months.
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