PPC is­sues its fifth cau­tion­ary no­tice

The Star Early Edition - - COMPANIES & NEWS - Sandile Mchunu

PPC IS­SUED a fifth cau­tion­ary an­nounce­ment to its share­hold­ers about the pro­posed merger talks it is in­volved with AfriSam. This fol­lows four other an­nounce­ments in Fe­bru­ary, March, May and June, is­sued since the be­gin­ning of the year.

“Share­hold­ers are ad­vised that the due dili­gence as­sess­ment and the dis­cus­sions re­gard­ing the pro­posed merger are still in progress and, if im­ple­mented, may have a ma­te­rial im­pact on the price of the com­pany’s shares. Ac­cord­ingly, share­hold­ers are ad­vised to con­tinue ex­er­cis­ing cau­tion when deal­ing in se­cu­ri­ties of the com­pany un­til such time a fur­ther an­nounce­ment is made,” the group said.

A merger be­tween the com­pa­nies would re­sult in the cre­ation of a South African-owned ce­ment pro­ducer well placed to de­velop as a ma­jor African ce­ment pro­ducer. The merger talks be­tween the two com­pa­nies have been go­ing on since 2014. How­ever, it is only now that the talks look like they may lead to a suc­cess­ful merger.

When the talks gained mo­men­tum in March, AfriSam chief ex­ec­u­tive Stephan Olivier said that he was step­ping down, de­clin­ing to ex­tend his con­tract with the com­pany. Rob Wes­sels has since taken over from Olivier as act­ing chief ex­ec­u­tive un­til the out­come of the merger talks have been fi­nalised.

The value of the pro­posed merger is not known, as it is still in its early stages. It will also have to pass the Com­pe­ti­tion Com­mis­sion ap­proval.

PPC’s share price was up 1.68 per­cent in the af­ter­noon to trade at R4.85. How­ever, by the end of the day it closed at R4.93 a share.

Both com­pa­nies have oper­a­tions in African coun­tries. AfriSam has a ce­ment plant in Tan­za­nia and PPC has plants in Zim­babwe, Rwanda, the Demo­cratic Repub­lic of Congo and Ethiopia. The com­pa­nies are bat­tling with govern­ment’s low in­fra­struc­ture spend, tough com­pe­ti­tion, low ce­ment prices and the dump­ing of cheap ce­ment from Asia. Com­bin­ing the two com­pa­nies will strengthen their mar­ket share in the con­ti­nent.

In South Africa, the group said dur­ing the pre­sen­ta­tion of its year re­sults to end March, that the real gross do­mes­tic prod­uct growth had dis­ap­pointed, av­er­ag­ing only 1 per­cent over the past three years. “We ex­pect a slight im­prove­ment to 2 per­cent fore­cast only in 2019,” it said.

It also noted that con­sumer con­fi­dence had been muted mainly due to con­sumers be­ing down­beat on the eco­nomic out­look and their per­sonal fi­nances.

“Over the past few years, pub­lic sec­tor ex­pen­di­ture on in­fra­struc­ture in the prov­inces has con­sis­tently ex­ceeded the al­lo­cated bud­get, while this has been the op­po­site in lo­cal govern­ment and with state owned com­pa­nies – 86 per­cent of pub­lic sec­tor in­fra­struc­ture spend is ex­e­cuted by pro­vin­cial govern­ment, lo­cal govern­ment and state owned en­ter­prises,” the group said.


AfriSam’s pro­posed merger with PPC may reach an ac­cord soon and would cre­ate an African ce­ment gi­ant.

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