PPC ends LafargeHolcim bid
Cement group rejects last remaining proposal and will focus instead on African investments and mega plants
PPC has dropped LafargeHolcim’s nonbinding proposal to buy a controlling stake in SA’s largest cement group, pushing all potential bidders off the table ahead of the holiday break.
The group’s independent board said the best value for shareholders lay in prioritising its investments in the rest of Africa, executing a mega plant strategy in SA and further improving competitiveness.
“It was an interesting offer. We are not averse to anything that is good for shareholders,” PPC chairman Peter Nelson said on Thursday.
The group wanted firm and binding offers, and not all possible suitors wanted to be “caught up in this”, he said.
Along with cement giant Dangote from Nigeria and Irish titan CRH, European mega-group LafargeHolcim’s interest in PPC is now history.
PPC had earlier rejected a joint partial offer from unlisted South African cement producer AfriSam and Canada’s Fairfax insurance conglomerate.
Nelson said PPC looked like “easy pickings” after recently investing heavily in its operations including in SA, during “difficult economic times”. It did not want to add layers of debt and complexity as new revenue streams started rolling in. The AfriSam-Fairfax proposal had included a R4bn recapitalisation of AfriSam before any merger.
He said CRH was invested in North America and Europe and withdrew of its own accord.
Meanwhile, LafargeHolcim had offered “quite a bit more” for a controlling shareholding in the company than Fairfax’s offer of R5.75 a share for a R2bn slice of PPC’s stock. This had envisaged combining LafargeHolcim assets in East Africa with PPC’s Rwanda, Ethiopia, Democratic Republic of the Congo and Zimbabwe plants.
“But if there is going to be a change of control, it comes with a proper control premium,” Nelson said. PPC had set a December 12 time limit for evaluating all such offers.
Meanwhile, the group had also topped up its broad-based black economic empowerment plans to be compliant with 30% equity participation under the Mining Charter. This came after 26% of empowerment equity had been diluted by its R4bn capital raising in September 2016 and the maturity of its first empowerment transaction in December of that year. The latter resulted in unwinding a big chunk of equity shareholding.
Mish-al Emeran, analyst at Electus Fund Managers, said PPC’s announcements were short of detail. “No reasons given for the suitors dropping out. And in terms of the [empowerment] deal PPC indicates that more information will be made available in the new year.”