September 26, 2017
By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-AfriSam, leading supplier of superior quality construction materials and technical solutions said Tuesday no bid by Dangote Cement Plc to acquire stakes in PPC Limited has been rejected.
“AfriSam/FairFax Africa bid is currently being considered by the target company board, and hopefully by the shareholders shortly. Dangcem is free to join the bid,” Thema Hlengani, lead director, Hlengani Communications said in an email to InvestAdvocate while reacting to an FBNQuest Research report published by InvestAdvocate and culled from Proshare.
Last week Dangote Cement (DangCem) announced that it is in talks with PPC of South Africa regarding a potential acquisition of 100% of PPC’s share capital. Although full details of the offer have not been provided, reports indicate that the offer consists of cash and DangCem shares. DangCem’s offer comes in the aftermath of a rejected bid from Afrisam and Canada’s Fairfax which sought to purchase 22% stake in PPC for US$154m.
“I would like to draw your attention to the highlighted sentence above as it is factually incorrect. No bid has been rejected by PPC Ltd. AfriSam/FairFax Africa bid is currently being considered by the target company board, and hopefully by the shareholders shortly. Dangcem is free to join the bid,” Hlengani said.
In an emailed statement from AfriSam, the Group says it’s confident its proposed merger with PPC has the potential to create significant benefits for all shareholders and stakeholders.
“AfriSam and PPC have a proud collective business history of more than 200 years and have survived and thrived through many tough times in the past,” the company said.
It says the consolidation that has occurred in the global cement market, for example Holcim-Lafarge and Heidelberg-ItalCementi, has dramatically changed the landscape and operating environment on the African continent over the last decade or so.
According to the statement, both PPC and AfriSam will continue to be negatively affected by the strength of global and regional powerhouses in Africa that has arisen through this consolidation.
Phuthuma Nhleko, AfriSam’s chairman said “This is why we believe that a merged South African national champion, with strong empowerment credentials from AfriSam and PPC’s existing black shareholders, will not only be competitive in this changing market but will be able to pursue empowerment and social agendas that are critical to its success.”
Both companies have recently commenced new businesses or commissioned new capacity in the rest of Africa. This provides significant growth opportunities and market diversity but does present start-up risks and liquidity challenges.
“We believe that the combined entity, with a significant equity commitment of R6 billion from Fairfax, can build an even better future for its shareholders, its great African staff and the communities and countries that it would serve. We believe that PPC has experienced and talented staff and management who will work well with our skilled team to drive a merged entity to unlock significant value for all stakeholders” added Rob Wessels, AfriSam’s Acting CEO.
“We also share PPC’s sentiment that it is best for shareholders to have an opportunity to assess the merits of the Merger and Partial Offer based on all relevant information, and that all parties follow the regulations that pertain to Offers that trigger regulatory procedures. AfriSam has also released its own important financial information which was not historically in the public domain as AfriSam is not listed.”
The proposed merger presentation says it will bring immediate value creation for PPC shareholders through relative premium to PPC in merger ratio; it will also unlock substantial value creation through realizable hard cost savings in South Africa from overlapping infrastructure and route-to-market.
Other key strategic rationale include the provision of firepower for PPC to participate in long-term growth in Africa and to compete with other cement majors in as a pan-African leader, sufficient balance sheet capacity to overcome short-term financial and operational difficulties in Tanzania DRC and Ethiopia and a host of other benefits.
