PPC lost 3 bids in 2017

PPC lost three formal bids that had been made for its assets in the space of a week in December 2017, according to the Global Cement Magazine.

First, in the week ending 8 December 2017, PPC said that Ireland’s CRH had formally decided not to continue in a bid for it. The Irish building materials company made a non-binding expression of interest in mid-November 2017. It then had time to conduct due diligence before submitting an updated bid.

Then, on 11 December 2017, Canada’s Fairfax Holdings stopped its bid for PPC. The investment body made an offer of around $150 million in September 2017 to buy a partial stake in PPC on condition that the cement producer agreed to a merger with AfriSam.

The South African cement producer subsequently described the offer as ‘low’ to its shareholders and said that it was anticipating a higher offer. Nigeria’s Dangote Cement, which had also submitted a bid, withdrew its offer in October 2017.

The remaining bid, from LafargeHolcim, was removed on 13 December 2017. PPC is planning a “mega-plant” in the Western Cape Province. Johan Claassen, PPC’s interim chief executive, stated that it was looking to replace its Reibeeck plant with a ‘semibrownfield’ facility that used around 25 percent of the current plant’s equipment. The company has long planned to expand its Western Cape capacity but domestic demand has not yet been high enough to justify the investment. There has been overcapacity in the market as well as imports from other regions, both of which have depressed cement prices.

Claassen said that the plant would cost around $200/t of installed capacity, without mentioning the intended capacity. He said that financing was already in place, adding that PPC had been able to increase its selling prices by two percent in the six months to 30 September 2017 and that, even with slow growth, South Africa would need the additional capacity supplied by the new plant by 2020. Claassen said that a formal announcement regarding the plant would be likely in early 2018. — Global Cement Magazine.