Irish firm joins fight for PPC
• Dublin-based building materials company joins AfriSam-Fairfax and LafargeHolcim in bid for assets of SA’s largest cement maker
PPC says it has received a nonbinding expression of interest from Irish cement maker CRH, putting three potential bidders into the ring for the assets of SA’s largest cement producer.
PPC says it has received a nonbinding expression of interest from Irish cement maker CRH, putting three potential bidders into the ring for the assets of SA’s largest cement producer.
CRH is indicating it is considering submitting an all-cash proposal to acquire a controlling stake in PPC.
The Dublin-based group is a diversified global building materials company listed on the London, Dublin and New York stock exchanges. It has a market capitalisation of €27bn.
CRH’s interest comes in addition to AfriSam-Fairfax, which has made a joint conditional partial offer for the group, and interest from Europe’s LafargeHolcim. The latter says it will firm its nonbinding expression of interest in the week of November 20.
PPC says CRH must now firm up its own expression of interest from this date. PPC’s share fell 5.22% at close of trade on the JSE on Monday.
“In an effort to align the CRH process with that of LafargeHolcim and [AfriSam]-Fairfax, the independent board of PPC intends to provide CRH an initial period to conduct due diligence of PPC to allow [it to] submit an updated expression of interest during the week commencing November 20 2017, which will include a value per share for PPC,” PPC said on Monday.
PPC has 11 cement factories in SA, Botswana, the Democratic Republic of Congo, Ethiopia, Rwanda and Zimbabwe. Capacity is up to 12.7-million tonnes of cement products each year by 2018. The group has mostly completed a large capital expenditure programme, with newly commissioned operations in the rest of Africa set to contribute nearly 50% of group profit within two or three years.
Fairfax’s offer to buy R2bn of PPC ordinary shares at R5.75 a share is much lower than valuations made by the group’s bigger shareholders. These range from R8 to R10 a share.
The proposed merger ratio is based on a share exchange of 58 PPC shares for 42 AfriSam shares. This valued PPC at a 62% premium based on pro forma earnings multiples applied to the two businesses, AfriSam said. The revised proposal included a R4bn recapitalisation of AfriSam before any merger with PPC.
Nigerian cement conglomerate Dangote had formally withdrawn its recent nonbinding communication of interest in a pan-African merger. The spate of interest caused PPC’s share price to gyrate wildly between R3.50 and above R7.50 in the past three months.
Sibonginkosi Nyanga, an analyst at Momentum Securities, said CRH’s nonbinding expression of interest showed that there were many companies that thought PPC was good value. “We think the maximum market value for PPC will be discovered. Creating a bidding war is the best way to maximise the sale price and get the most favourable terms for PPC.”