Cement. Picture: THINKSTOCK
Cement. Picture: THINKSTOCK

Cement maker PPC is hoping to have a new merger proposal from AfriSam by the beginning of September, with the latest termination of merger talks sending PPC’s share price down almost 7% on Friday.

PPC said its smaller rival AfriSam had terminated its “heads of terms”‚ which were to precede a formal agreement, but may soon offer a new deal. PPC and AfriSam announced in February they had restarted talks to potentially merge their operations, nearly two years after previous talks were abandoned. Specific terms had been set for the proposed deal, including on empowerment levels, and debt ratios.

PPC spokesperson Siobhan McCarthy said PPC had indicated to AfriSam it would prefer any new offer by September 1, after which it would lift its cautionary trading notice. PPC declined to comment on the reasons for the withdrawal by AfriSam, which confirmed the withdrawal, but also declined to elaborate.

The pull back in PPC’s share price should be expected after a strong performance earlier in the week, according to Aeon Investment Management analyst Asief Mohamed. “There was still a positive longer term outlook for PPC’s stock, as the results of the company’s investments into African regions began to filter through. I think in the longer term, provided the PPC board stays independent and looks after the long-term interests of shareholders, the outlook is positive.”

The companies said the merger would allow them to compete in a market dominated by multinational and regional players. The merged entity would have complementary production assets in seven African countries.

The on-off talks between PPC and AfriSam resulted in the departure of former Reserve Bank governor Tito Mboweni as an independent non-executive director on July 19, and CEO Darryll Castle on July 24.

At 3pm, PPC was down 6.83% to R4.91, having added 19.46% for the week.

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