In a bid to extend to consolidate on its growing business empire across the African continent, Africa’s richest man and leader in cement manufacturing on the continent, Alhaji Aliko Dangote, is considering bidding for PPC Group Ltd, South Africa, which is the largest cement maker in the country.
The move by Dangote, despite recent hostilities experienced by Nigerians resident in the country if it sails through, would further buoy up his businesses.
Dangote Cement Plc, according to a source close to the investor, is offering a counter offer for the Johannesburg-based company as a way to accelerate expansion outside its home market of Nigeria. According to a stakeholder, PPC will consider any rival offers to the joint approach by Canada’s Fairfax Financial Holdings Ltd. and domestic rival AfriSam Group Pty Ltd.
and present them to shareholders in early October, Blomberg reports. PPC shares jumped from 2.9 per cent to 6.38 rand as of 3:30 p.m. in Johannesburg, on track for the highest on a closing basis since April 25. That values the company at 10.2 billion rand ($792 million).
Also, monitoring the acquisition move made on PPC Group by Dangote is Lafarge Holcim Ltd., the world’s biggest cement maker based in Jona, Switzerland, and Germany’s Heidelberg Cement AG, as well as Titan Cement Co.
SA of Greece. A source from PPC revealed that Dangote’s interest in PPC Group sparked off after a Toronto-based Fairfax offered to buy 2 billion rand of PPC’s shares; and supported a merger with AfriSam earlier this week.
The proposal, according to PPC, “significantly undervalued” the transaction. Meanwhile, the Spokespeople for Dangote, LafargeHolcim, HeidelbergCement, Titan, Fairfax and PPC, according to Blomberg, have declined to comment.
However, the future ownership of PPC is up for grabs after merger talks with AfriSam failed for a second time last month following two-and-a-half years of on-off negotiations.
Both companies have been struggling with high debt levels, which Fairfax offered to resolve with its unexpected entrance to the saga this week.
The Toronto-based company said it would recapitalize AfriSam, enabling it to settle outstanding loans, and buy 2 billion rand worth of PPC shares at 5.75 rand each.
PPC’s current share price of 6.38 rand suggests that investors expect a higher offer to emerge. The Fairfax proposal would give the Canadian company a stake of more than 30 per cent stake in the combined entity.
The value of the bid would rise when savings generated by sharing PPC and AfriSam infrastructure are taken into account, sources disclosed.
The Public Investment Corp., the biggest shareholder in both PPC and AfriSam, would prefer a higher cash component of more than 6 rand a share, the people said, adding that Fairfax hasn’t ruled out increasing its offer.
