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June 24, 2017

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Asia Cement unit agrees to acquire assets in Sichuan

TAIPEI -- Asia Cement Crop. (亞洲水泥), one of Taiwan's leading cement suppliers, said Friday that its Hong Kong-listed subsidiary Asia Cement (China) Holdings Corp. has agreed to acquire a cement company in Sichuan, western China.

Asia Cement said that after the acquisition, Asia Cement (China) is expected to become the largest cement supplier in Chengdu, the capital of Sichuan province, because of the significant expansion in annual production capacity.

According to the deal, made through its unit Sichuan Yadong Cement Co., Asia Cement (China) will spend 2.05 billion Chinese yuan (US$331 million) to acquire a 100-percent stake in Sichuan Lanfeng Cement Co.

The acquisition agreement will also enable Asia Cement (Asia) to obtain a 100-percent stake in Lanfeng Cement's wholly owned unit Sichuan Lanfeng Building Materials Co.

The deal is still pending approval from shareholders of Asia Cement (China) and Lanfeng Cement as well as Chinese authorities, Asia Cement said.

Lanfeng Cement operates two production lines with a total annual capacity of 5 million metric tons, while Asia Cement (China)'s Yadong Cement churns out 6 million metric tons of cement a year.

After the transactions, Asia Cement (China)'s annual capacity in Sichuan will rise to 11 million metric tons, pushing its annual capacity in all of China to 35 million metric tons.

In addition to its existing production site in Sichuan, Asia Cement (Asia) owns cement plants located in Jiangxi and Hubei provinces.

According to Asia Cement, Lanfeng Cement, founded in September 2008, is capitalized at 350 million yuan. It is located in Pengzhou in Sichuan province, about 19 kilometers from Asia Cement (Asia)'s production site and about 40 kilometers away from Chengdu.

It was Asia Cement's first acquisition in China since 2010, when the Taiwanese company acquired a cement plant in Wuhan in Hubei province.

In 2013, Asia Cement posted NT$8.37 billion (US$276 million) in net profit, or NT$2.12 in earnings per share, up from NT$4.65 billion in net profit, or NT$1.64 in EPS recorded a year earlier.

Asia Cement said the improvement in its bottom line resulted from the improvement in Asia Cement (China)'s results, which showed a 108 percent year-on-year increase in net profit on the back of strong demand in China.

Asia Cement owns a 68.2 percent stake in Asia Cement (China).

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