Dangote Cement to Pay 75% of Profit

By Goddy Egene, 10.13.2010 

Shareholders of the proposed Dangote Cement (DCP) Plc are in for a good time, as the management of the company has decided to pay 75 per cent of the proposed profit of the company as dividend.DCP, a company that will have a market capitalisation of N2.1 trillion, is a product of Dangote Cement (formerly Obajana Cement) and Benue Cement Company (BCC) Plc.Shareholders of both companies have approved the merger and very soon it is expected to be listed on the NSE, while BCC would be delisted. While investors are waiting for the listing, the enlarged company said in its scheme of arrangement that 75 per cent of its profit would be paid to shareholders as dividend.


Financial advisers to the merger, Vetiva Capital Management Limited and Afrinvest West Africa Limited, said that “both sets of shareholders will continue to enjoy dividend growth in the coming years taking into account the earnings growth profile of the post merger DCP and the fact that the prevailing 75 per cent dividend payout ratio would be retained.”


However, market operators said that they are not surprised with dividend projection of DCP considering the robust dividend policy of the Dangote Group. Companies under the Dangote Group listed on the Nigerian Stock Exchange (NSE) paid over N23 billion as dividend to shareholders for the financial year ended December 31, 2009. The total dividend payout is significant considering the harsh operating environment that arose from the global financial meltdown.


President of Dangote Group, Alhaji Aliko Dangote, had assured shareholders of immense benefits from the merger which include: reduced operational cost arising from improved efficiency and the remaining five years of tax holiday still being enjoyed by some of the component arms of the emergent company.


He said, “The proposed merger is conceived with the goal of consolidating the cement producing entities of Dangote Industries Limited in Nigeria under a single entity presenting a robust platform for the enlarged DCP to optimise on available growth opportunities having regard to the present state of the Nigerian cement industry.


This is expected to significantly increase production capacity, boost turnover and profitability and eventually lead to an enhanced dividend payout and capital appreciation for the investors.” Already the Chief Executive Officer, Afrinvest West Africa, Mr. Ike Chioke has endorsed the merger, saying it would increase value generation by leveraging positive economies of scale in purchasing and manufacturing.


According to him “The fact that the merger will account for 25 per cent of the entire market capitalisation of the NSE shows that it will boost activities on the exchange. We are also aware that shareholders in both companies will stand to gain a lot from this merger, as it will benefit them in the area of improved activities, which will translate to higher dividends”.



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