Dangote makes overture to PPC
PPC says it has received a nonbinding “communication of interest” from Nigerian company Dangote Cement to buy the entire share capital of the company.
PPC said on Thursday it had received a nonbinding “communication of interest” from Nigerian company Dangote Cement to buy the entire share capital of the company.
PPC’s share price jumped as much as 5.7% in afternoon trade on Thursday.
This comes after PPC’s board earlier advised of indicative proposals from two other bidders, each in relation to a potential pan-African combination with SA’s largest cement producer.
Earlier in September, South African cement producer AfriSam submitted a revised merger proposal to PPC in tandem with an undertaking by Canada’s Fairfax Africa Investments to buy R2bn in ordinary shares at R5.75 a share.
AfriSam and PPC had previously said they were looking to create a merged cement producer that could compete in the rest of Africa.
AfriSam had been affirmed as the bidder in any merger. Mish-al Emeran‚ an equity analyst at Electus Fund Managers‚ said there would be several hurdles to a sale or merger, including competition issues.
“I think this will take some time to play out. I think given that PPC is trading well below its replacement value, one can understand why there is interest from a few players,” he said.
“One of PPC’s earlier announcements indicated that two other trade bidders with a ‘pan-African’ presence were interested, so I think that limits it to a few. ARM Cement [Kenya] and Heidelberg are two names, besides Dangote Cement, that spring to mind,” he said.
Media reports also stated that Europe’s LafargeHolcim was also interested.
PPC said the company’s independent board was considering Dangote’s offer. PPC’s board earlier recommended that eligible shareholders should accept the revised offer by AfriSam and Fairfax.
PPC group manager of corporate affairs Siobhan McCarthy said further details remained confidential at this stage.