JOHANNESBURG, SEPTEMBER 14, 2017 – Nigeria’s Dangote Cement has approached South African cement producer PPC about a tie-up, but talks are at the preliminary stage, it said.
PPC is already considering a bid by local rival AfriSam , which launched a new all-share bid that values PPC at about 9.2 billion rand ($700.47 million) ($1 = 13.1340 rand).
Meanwhile, the future ownership of PPC is up for grabs after merger talks with AfriSam failed for a second time last month following two-and-a-half years of on-off negotiations. Both companies have been struggling with high debt levels, which Fairfax offered to resolve with its unexpected entrance to the saga this week. The Toronto-based company said it would recapitalize AfriSam, enabling it to settle outstanding loans, and buy 2 billion rand worth of PPC shares at 5.75 rand each.
PPC’s current share price of 6.34 rand suggests investors expect a higher offer to emerge.
The Fairfax proposal would give the Canadian company a stake of more than 30 percent stake in the combined entity, said two of the people. The value of the bid would rise when savings generated by sharing PPC and AfriSam infrastructure are taken into account, they said.
The Public Investment Corp., the biggest shareholder in both PPC and AfriSam, would prefer a higher cash component of more than 6 rand a share, the people said, adding that Fairfax hasn’t ruled out increasing its offer.