By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-Emerging Lafarge Africa Plc cement producers will have a market capitalisation of over $3 billion listed on the Nigerian stock exchange (NSE) according to Reuters quoting Guillaume Roux, chief executive officer (CEO) of Lafarge Cement Wapco Nigeria Plc.
The news agency reported that Lafarge Africa will have a market capitalisation of over $3 billion listed on the Nigerian bourse and the Lafarge Group will own 73 percent stake in the emerging entity, making it the sixth most capitalised firm on the Nigerian bourse.
“The consolidation will enable the enlarged entity to accelerate growth on the continent and expand its product offering in South Africa across the region,” Roux said.
He affirmed that Standard Chartered Bank and Chapel Hill Denham are financial advisers to the merger, thereafter Lafarge Africa would seek to boost capacity by 5.5 million tonnes to 17.5 million tonnes.
The company in statement Wednesday and made available to InvestAdvocate said under the proposed terms, Lafarge Group will transfer its direct and indirect shareholdings in Lafarge South Africa Holdings (Pty) Limited (100.00% – representing 72.4% of underlying companies in South Africa), United Cement Company of Nigeria Limited (35.00%), Ashakacem Plc (58.61%) and Atlas Cement Company Limited (100.00%) to Lafarge Wapco.
According to the cement producer, the transaction will be concluded through a cash consideration of US$200m and the issuance of 1,402,575,984 Lafarge Africa shares to Lafarge Group.
‘’The transaction is subject to Lafarge Wapco shareholder approvals and obtaining required regulatory and other customary authorizations. The Group anticipates completion during H2 2014,’’ Lafarge said.
The statement had quoted Roux as saying “Today’s announcement marks a key milestone. It adds momentum to our push for differentiation in order to deliver innovation that increases and improves our product portfolio. Our objective is to bring more housing and ever better solutions to contribute to building better cities that are more beautiful, more compact, more connected and more durable.”
Listing on the Nigerian bourse, Lafarge Africa will compete intensely with Nigeria’s Dangote Cement Plc owned by Aliko Dangote, Africa’s riches man.
On its part, Bloomberg quoted Tund Abidoye, analyst at FBN Capital as saying that the deal is aimed at responding to its more aggressive rival, Dangote Cement, and to consolidate its positioning as a leading cement firm, ‘’While synergies may be modest, the company will gain production capacity and market share in the continent’s two biggest economies,’’ Abidoye said.
Also, Bloomberg quoted Mike Nwanolue, analyst as Greenwich Trust Group Limited as saying “It will boost their profile, strengthen their capacity and pricing on the Nigeria market, unlike when it was like a fringe player in different African markets,”
Nwanolue said Dangote cement got a lot of attention in the continent with acquisitions, which enabled it to source funds and build capacity. ‘’Some of that attention will now be shifted to Lafarge Africa and competition deepened,” he said.
Nigeria’s biggest cement maker Dangote Cement has a market capitalisation of about $24 billion and is set to open cement plants across the entire African continent.
As at the close of business Tuesday, shares of Lafarge Wapco, closed flat at N113 per share valuing it at N337.6 billion, while Ashaka Cement gained the maximum 10.17 percent as it N23.59 and closed N25.99.
