The proposed merger of cement producers PPC and Afrisam was barely discussed at PPC’s annual general meeting on Monday.

No questions were raised about what is likely to be a protracted affair, with PPC’s chairman, Peter Nelson, saying after the meeting that a tie-up could take up to 18 months after a deal had been agreed.

Regarding other merger possibilities, Nelson said PPC was an attractive company with the potential to draw more than one suitor. PPC would consider any binding and firm offer, from Afrisam or any other party, should one arise. The smaller cement producer, Afrisam, pulled its second merger proposal on Friday and has said it is working on a larger and stronger proposal.

Nelson said PPC was continuing its daily operations while it awaited the next proposal.

PPC and Afrisam had been in their latest round of talks for about seven months, he said.

If an offer were accepted, it could take between 12 and 18 months, given legal and competition authority processes, to complete a merger.

A merger of Afrisam and PPC would largely be beneficial for Afrisam. "Cement-pricing pressure over the last 18 months, due to supply growth and lacklustre demand, has made life difficult for cement producers, especially so for those with high debt and no real or sustainable cost advantage; Afrisam falls into that bracket," Mish-al Emeran, an equity analyst at Electus Fund Managers, said.

"The market is in need of consolidation," he said.

"PPC, with its scale and cost advantage and post its equity raise last year [2016], is relatively better placed to weather a sustained low cement price environment. In my view, Afrisam is more in need of a deal," he said.


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