CRH is among companies considering a counterbid for PPC that could trump an offer by Canada’s Fairfax Financial Holdings, according to people familiar with the matter, adding a potential new twist to the battle for SA’s largest cement maker.
The Irish building materials supplier had held early deliberations about pursuing an acquisition, said the people, who asked not to be identified as the plans are not public.
A final decision had not yet been made and the company might decide against an offer in favour of US acquisitions, the people said.
Issues that had yet to be settled included how the Dublin-based company would tackle the requirement of a black economic empowerment deal, one of the people said.
The takeover was also likely to require support from the Public Investment Corporation (PIC), Africa’s biggest money manager and a top shareholder in PPC. Representatives for CRH and PPC declined to comment.
PPC’s future as an independent company has been clouded for months after talks about a tie-up with rival AfriSam Group failed and the Toronto-based insurer Fairfax made a partial offer for R2bn of PPC stock at R5.75 a share. PPC has a market value of R11bn.
Fairfax’s offer is conditional on PPC merging with AfriSam, and the South African company has appointed Investec to review the proposal.
Dangote Cement, Nigeria’s biggest company, considered making a counteroffer, but withdrew its interest last week.
PPC said on October 3 that it had received two "credible indicative proposals" as well as the Fairfax offer, one of which was from Dangote.
It did not identify the third potential bidder.
CRH was just one of a number of parties considering whether to bid for PPC, one of the people said.
Bloomberg News reported in September that LafargeHolcim, HeidelbergCement and Titan Cement of Greece were also monitoring PPC’s situation. A CRH bid for the South African company would open a new front for the Irish company, which has emerged as a consolidator in the global building materials industry.
CRH agreed in September to take over Ash Grove Cement of the US for $3.5bn, but earlier this week, Denver-based construction supplier Summit Materials made a rival bid.
The market has been the focus of deals for the past two years following the creation of LafargeHolcim. More recently, Germany’s HeidelbergCement agreed to acquire Italian assets from Cementir Holding.
PPC shares lost more than 2% on Thursday to end the day at R6.79.
They have gained about 26% in 2017, during a year dominated by on-off merger talks with AfriSam.
The two companies have discussed a combination to strengthen their balance sheets, cut operational costs and deal with the challenge of lower domestic demand and cheaper cement prices.