Kenya’s ARM latest takeover target as cement makers scramble for Africa
London/Nairobi — ARM Cement the Kenyan building-materials supplier, is the newest takeover target in the battle among the world’s biggest cement makers to expand in Africa, according to people familiar with the matter.
ARM’s owners are exploring a sale, said the people, who asked not to be identified because the talks are private. The Nairobi-based company is currently valued at about $133m on the Nairobi Securities Exchange, though the sellers are seeking more than double that amount, the people said. ARM’s two biggest shareholders are CDC Group, a development-finance institution owned by the UK government that invested last year, and the founding Paunrana family.
"We are in the process of finding an equity and a strategic buyer to inject equity into the business," ARM MD Pradeep Paunrana said by phone on Friday. "The process is on and we expect, over the next few weeks, to complete the process."
Rival cement companies, including LafargeHolcim, the world’s biggest, HeidelbergCement of Germany, Nigeria’s Dangote Cement and Titan Cement of Greece are among parties considering bids, said the people. No final decisions have been made. ARM currently produces about 2.7-million tonnes of cement in Tanzania, Kenya and Rwanda, according to its website.
Spokespeople for LafargeHolcim, HeidelbergCement and Titan declined to comment. A spokesperson for Dangote Cement didn’t respond to an e-mail looking for comment. A spokesman for parent company Dangote Group said Dangote Cement wasn’t intending to bid for the company.
There are more than six potential investors, Paunrana said. The evaluation process includes gauging the level of interest in the company and deciding how to structure the deal, he said.
The European players and Dangote are competing to expand their footprint on a continent with the potential to develop infrastructure at a blistering pace in coming decades. Cement use in Africa is less than 50kg per person, with some countries as low as 30kg, according to London-based Bloomberg Intelligence analyst Sonia Baldeira. This compares with China’s 1,737kg per person and Europe’s 230kg.
ARM isn’t the only target. LafargeHolcim is in talks with SAs biggest cement maker, PPC, while HeidelbergCement, Dangote and Titan are monitoring the situation. The 125-year-old company has received a formal offer from Canadian insurer Fairfax Financial Holdings, which has pledged to buy a stake on condition it agrees to merge with a local rival. PPC has supplied cement for major building projects in several African countries and has expanded with new plants in Ethiopia, Zimbabwe and the Democratic Republic of Congo.
Major cement makers outside Africa have been in consolidation mode since the creation two years ago of LafargeHolcim from Swiss and French rivals. Last month, Dublin-based CRH received approval from Ash Grove Cement shareholders to buy the US supplier for $3.5bn, and in September, HeidelbergCement agreed to acquire Italian assets from Cementir Holding.