THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the course of action to be taken, you should consult your stockbroker, bank manager, solicitor, accountant or other professional adviser immediately. Bursa Malaysia Securities Berhad takes no responsibility for the contents of this Circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Circular. LAFARGE MALAYSIA BERHAD (Company No.: 1877-T) (Incorporated in Malaysia under the Companies Act, 1965) CIRCULAR TO SHAREHOLDERS IN RELATION TO THE PART A PROPOSED ACQUISITION OF THE ENTIRE EQUITY INTEREST IN HOLCIM (MALAYSIA) SDN BHD BY LAFARGE MALAYSIA BERHAD ( LMB ) OR ITS NOMINATED WHOLLY-OWNED SUBSIDIARY FROM PT HOLCIM INDONESIA TBK FOR A CASH CONSIDERATION OF RM330.0 MILLION ( PROPOSED ACQUISITION ) PART B INDEPENDENT ADVICE LETTER FROM PUBLIC INVESTMENT BANK BERHAD TO THE NON- INTERESTED SHAREHOLDERS OF LMB IN RELATION TO THE PROPOSED ACQUISITION AND NOTICE OF EXTRAORDINARY GENERAL MEETING Principal Adviser Independent Adviser The notice of Extraordinary General Meeting ( EGM ) of LMB to be held at Zamrud Room, The Saujana Hotel Kuala Lumpur, Saujana Resort, Jalan Lapangan Terbang SAAS, 40150 Shah Alam, Selangor Darul Ehsan, Malaysia on Friday, 6 November 2015 at 3.30 p.m. or any adjournment thereof, for the purpose of considering the Proposed Acquisition together with the Form of Proxy are enclosed herewith. If you are unable to attend and vote in person at the EGM, you are requested to complete, sign and return the enclosed Form of Proxy in accordance with the instructions printed thereon as soon as possible so as to arrive at the registered office of the Company at Level 12, Bangunan TH Uptown 3, No. 3, Jalan SS21/39, 47400 Petaling Jaya, Selangor Darul Ehsan not later than forty-eight (48) hours before the time set for holding the EGM or any adjournment thereof. The lodging of the Form of Proxy will not preclude you from attending and voting in person at the EGM should you subsequently wish to do so. Last date and time for lodging of the Form of Proxy : Wednesday, 4 November 2015 at 3.30 p.m. Date and time of the EGM : Friday, 6 November 2015 at 3.30 p.m. This Circular is dated 16 October 2015
TABLE OF CONTENTS (Cont d) APPENDICES PAGE I FURTHER INFORMATION ON HMSB 52 II AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF HMSB FOR THE FYE 31 DECEMBER 2014 57 III INDEPENDENT VALUATION LETTER 111 IV FURTHER INFORMATION 132 NOTICE OF EGM FORM OF PROXY ENCLOSED ENCLOSED [The rest of this page is intentionally left blank] v
5. RATIONALE AND BENEFITS OF THE PROPOSED ACQUISITION Following the completion of the merger of Lafarge S.A., being the then ultimate holding company of LMB, and Holcim Ltd, now known as LafargeHolcim, being the ultimate holding company of HMSB, pursuant to the completion of a public exchange offer of new shares by Holcim Ltd for Lafarge S.A. shares on 10 July 2015, LafargeHolcim emerged as the ultimate holding company of LMB. As a result, the Proposed Acquisition is to facilitate the consolidation of the businesses of manufacturing and sale of cement, ready-mixed concrete and other related building materials of LafargeHolcim in Malaysia under LMB. The LMB Group is a group of companies in Malaysia and Singapore whose core businesses are in the manufacturing and sale of cement, ready-mixed concrete and other related building materials. The HMSB Group on the other hand is one of the leading building materials providers in Johor and the Southern Peninsular of Malaysia with its main base in Pasir Gudang, Johor. The Proposed Acquisition would increase the cement plants annual installed production capacity of the enlarged LMB Group from 12.95 million MT to 14.14 million MT. The Proposed Acquisition is expected to deliver synergies through the following: (i) (ii) (iii) operational efficiencies realised from the selection and implementation of best practices, including in logistics, distribution, procurement, information technology and energy consumption; cost synergies realised from the increase in economies of scale and bargaining power, reduction or elimination of duplicative functions and the consolidation of corporate overhead; and capital expenditure synergies realised through selection and adoption of best practices on maintenance capital expenditures and higher efficiency on expansion capital expenditures. The realisation of the above synergies is expected to contribute positively to the future earnings and cash flows of the enlarged LMB Group following the completion of the Proposed Acquisition. Based on the above and barring any unforeseen circumstances, the Board of LMB believes that the Proposed Acquisition would contribute positively to the future prospects and shareholders value of LMB in the long term. 6. INDUSTRY OVERVIEW AND PROSPECTS OF HMSB AND THE ENLARGED LMB GROUP 6.1 Overview and outlook of the Malaysian Economy The Malaysian economy recorded a stronger growth of 6.0% in 2014 (2013: 4.7%), driven primarily by the continued strength of domestic demand and supported by an improvement in external trade performance. Net exports turned around to contribute positively to growth after seven years of negative contribution, as Malaysia benefitted from the recovery in the advanced economies and the sustained demand from the regional economies. While the growth in private domestic demand remained strong, public sector expenditure registered slower growth, consistent with the Government s fiscal consolidation efforts. 9
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