Dangote Ups Ante for PPC With Cash, Share Offer

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LAGOS, SEPTEMBER 21, 2017 – Dangote Cement Plc, the Nigerian company controlled by Aliko Dangote, has written to PPC Ltd. offering South Africa’s biggest cement maker cash and shares as part of a takeover deal that is fueling a bidding war. PPC’s shares rose.

“We are waiting for them to get back to us, hopefully early next week,” Aliko Dangote said in an interview with Bloomberg TV in New York. “They can be part and parcel of the Dangote Cement story, where we’re going to be in 18 African countries.”

The approach by Lagos-based Dangote follows a joint offer from Canada’s Fairfax Financial Holdings Ltd. and PPC’s domestic rival AfriSam Group Pty Ltd. While PPC has said it will consider all bids, the Public Investment Corp., its largest shareholder, supports a tie up with AfriSam and Fairfax, people familiar with the matter said last week. LafargeHolcim Ltd., the world’s biggest cement maker, is also monitoring PPC’s situation, the people said.

Two banks have agreed to support Dangote’s offer, the chairman said, without identifying them. “They’ll be able to fund us 100 percent.”

PPC gained as much as 2.9 percent to 6.40 rand, before paring its rise to 6.38 rand as of 2:02 p.m. in Johannesburg on Thursday, valuing the company at 10.2 billion rand ($760 million). The stock has climbed 15 percent this year. Dangote Cement, which has advanced 23 percent in 2017, was unchanged in Lagos trading for a market value of 3.6 trillion naira ($10 billion).

“The market in South Africa needs consolidation,” Dangote said. “It’s the right thing for us to go in there and consolidate. The issue is that they are making a bit of a mistake. They are focusing on the highest bidder. They are focusing more on value rather than, ‘What does it have for us going forward?”’

Dangote said his company is mulling a debut Eurobond and is waiting for clarity from Nigeria’s central bank about whether it would be able to keep proceeds in dollars or have to convert them to naira.

“The company doesn’t really need to raise money, unless we want to go for an acquisition,” he said. “We have a very healthy balance sheet. Our debt ratio is tiny. The rating of Dangote Cement is very good. It’s a notch higher than the government of Nigeria’s.”

The company is rated Ba3 by Moody’s Investors Service, three levels below investment grade, while Nigeria is rated B1.

Dangote Cement, which already operates in South Africa through Sephaku Cement, has expanded rapidly outside of Nigeria in recent years, including into Ethiopia and Tanzania.

“The only thing that will sort out the infrastructural deficit in Africa is cement,” Dangote said.

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