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CPC: The commitments for the cement deal

30/07/2007 13:40
The Commission for the Protection of Competition is expected to announce the commitments that Vasiliko Cement Works and Cyprus Cement Company will have to take after its decision to approve the deal on Tuesday. According to StockWatch sources, the commitments focus on two main points: The lowest possible cost for the consumer and the development of competition in the import of cement and the production of ready-made concrete.

The CPC will urge the two companies to commit that they will freeze cement prices for the next two years and the increases that will be imposed after that will be in line with the course of the other building material.

Also, the Commission will not allow VCW and CCC to import cement if there are no other players in the market and will urge them to reduce the market shares they hold in the production of ready-made concrete.

It is worth noting that according to the law, the CPC has the right to cancel the deal if the commitments are not kept by the companies.

The agreement provides that Vasiliko will undertake the management of the cement production in Moni and will acquire a number of subsidiaries that are actively involved in the construction industry.

Vasiliko will issue and allocate to Moni 18.2 million new shares, which will represent 25.3% of the share capital of Vasiliko.

Vasiliko currently produces 75% of the cement in Cyprus and Moni 25%.

Since March 12 (when the deal was announced), the CCC share has generated profits of 89%, despite CPC’s reservations on the compatibility of the merger with competition. The CCC production unit is situated in a seaside plot of 960 donums, which will be developed for housing purposes.

The share of Vasiliko surged 3.9%.

The CCC share is currently trading at €1.59 and at +2.6%, concentrating €997 thousand of the turnover. The CCC warrant is up 5.6% to €1.33, absorbing €183 thousand of the investors’ interest. Similarly, the other companies of Galatariotis Group are following an upward trend, with KG reaching €0.44 and +7.3%, CCC Holdings soaring 3.5% to €1.49 and CCC Tourist putting on 2.9% to €0.35. On the other hand, VCW is down 2% to €2.90, attracting €43 thousand of the total volume.

The CSE general index is suffering losses of 1% to 4905.7 points, while FTSE is down 1.1% to 1679.8 points.