By Emil Danielyan
The Swiss group Holcim, one of the world’s leading producers of cement and other construction materials, blamed on Tuesday the bleak global economic outlook for its unexpected decision last week to cancel its planned takeover of Armenia’s largest cement factory. A spokesman told RFE/RL that the company scrapped the $30 million deal with the Armenian government because of the “difficult times” experienced by Western transnationals since the September 11 terrorist attacks on the United States.
Holcim was declared winner of an international tender for the state-owned cement plant in the southern town of Ararat late last month after proposing to pay $10 million for its equity and land and to invest $20 million in the next six years. Officials in Yerevan said the purchase of the Ararat Cement company will be one of the biggest success stories of the decade-long privatization process in Armenia. However, the government announced last Wednesday that Holcim’s executive board has decided to pull out of the deal.
“Unfortunately, the board’s decision was negative with regard to Armenia,” the Holcim spokesman, Roland Walker, said in an interview. “This has nothing to do with the country per se or its economic environment. It is just a result of the overall difficult times since September 11.”
“We have to focus on our investments in the existing Holcim divisions on all five continents,” he added.
President Robert Kocharian hinted last week that the planned “very beneficial” takeover might have been scuttled by the Ararat Cement management opposed to the company’s privatization. Ararat Cement’s chief executive, former prime minister Aram Sarkisian, is one of Kocharian’s leading political opponents. He has repeatedly argued against the sell-off.
But Walker denied any pressure on Holcim from the opponents of the privatization, insisting that the board’s decision was “not directly linked with Armenia and its domestic factors.”
The Swiss firm operates in 70 countries of the world and posted net sales of $8.6 billion last year. The group’s operating profits rose by 6.9 percent to $615 million in the first half of this year. However, the global fallout from the terrorist attacks on New York and Washington has already had negative effects on its performance. Holcim shares tumbled to a year low on September 21. They have since increased by almost 20 percent but are still 16 percent lower on the year-on-year basis.
Meanwhile, the Armenian intends to make another attempt to privatize Ararat Cement early next year. According to Minister for State Revenues David Vartanian, a new international tender will likely be called “in four or five months from now.”