Place your advert here

Dangote To Acquire South African Cement Company | The Precision

0
22
Africa’s richest man, Aliko Dangote has joined the
race to buy South African cement maker PPC, which is already the subject
of a takeover bid valuing the company at $700 million. 

Dangote
Cement, which is controlled by Dangote and is the biggest cement maker
in Africa with a capacity of nearly 46 million tonnes a year, said in a
statement that it was interested in buying all of PPC’s shares. 
The
expression of interest from the Nigerian company with a market
capitalisation of $12 billion raised market hopes of a bidding war,
sending PPC shares 5.5 percent higher to 6.29 rand. 
PPC’s
local rival AfriSam launched an all-share merger proposal for South
Africa’s biggest cement maker last week and PPC said it also had a third
offer that was “credible and potentially value-enhancing for
shareholders”. 
“From the previous offer that
was made, it was agreed in the investment community that it was
undervalued. So now when the next bidder makes an offer and doesn’t put a
price, there can only be speculation to the upside,” said Afrifocus
Securities equity analyst Tinashe Kambadza. “Economic rational aside, it
will all be about the bid premium.” 
The
expansion of Dangote and the entry of new firms across Africa has led to
an oversupply of cement-based products and competition as companies try
to win market share. In February, former PPC chief Darryl Castle said
PPC would be the “architects” of consolidation in the industry. 
Dangote
Cement Plc (DCP), which has operations in 10 countries, is already
present in South Africa through its 64 percent holding in Sephaku
Cement. 
“DCP hereby confirms that the board of
directors of DCP has merely communicated its interest to the board of
directors of PPC with respect to the acquisition of the entire share
capital of PPC,” the Nigerian company said. 
“This communication is still at the preliminary stage.” 
PPC said in a statement its independent board was considering the Dangote proposal. 
Shares in Dangote rose 5 percent to 211.5 naira ($0.69) in Lagos after the takeover approach was announced. 
The
PPC board has already said AfriSam’s all-share proposal valuing PPC
shares at 5.75 rand “fundamentally undervalues” the company, adding
pressure on its local rival to sweeten the deal. 
AfriSam
and its backer, the African division of Canada’s Fairfax Africa
Holdings, want to create an African cement giant with operations in six
countries and the financial firepower to take on regional rivals, such
as Dangote Cement. 
Last Monday’s merger
proposal was AfriSam’s third attempt in three years to buy PPC. AfriSam,
which is majority owned by the Public Investment Corporation pension
fund, first proposed a merger in 2014 when PPC’s share price had been
under pressure. 
If Dangote succeeds in buying PPC, the merged
company would have a combined cement capacity of more than 57 million
tonnes a year and give Dangote a majority of the South African market. 
 
Source: Reuters

NEWSLETTER SUBSCRIPTION

Enter your email address to subscribe to this website and receive notifications of new posts by email.

LEAVE A REPLY

Please enter your comment!
Please enter your name here