Unconfirmed reports say Aliko Dangote, Africa’s richest man, is among those considering counter offers for PPC Group Ltd., South Africa’s largest cement maker, a deal that could see his cement company further accelerate expansion outside the Nigerian market.
According to reports gleaned from Bloomberg, Dangote’s entry into the bid could signal a bidding contest for the South African cement manufacturer since a joint approach by Canada’s Fairfax Financial Holdings Ltd. and domestic rival AfriSam Group Pty Ltd. is already on the table.
However, PPC is said to be open to considering any rival offers, which it would present to shareholders in early October.
Dangote has been expanding out of Nigeria, its biggest market, and has operations in 14 other African countries. Aliko Dangote, who also has interests in sugar, flour, and packaged food businesses, has a net worth of $11.4 billion, according to the Bloomberg Billionaires Index.
Dangote is also said to be open to a sale of all or part of its Pretoria-based Sephaku Holdings Ltd. unit to win regulatory approval for a takeover.
LafargeHolcim Ltd., the world’s biggest cement maker based in Jona, Switzerland, and Germany’s HeidelbergCement AG are also monitoring PPC’s situation, according to reports.
Titan Cement Co. SA of Greece is equally said to be looking at the South African company.
However, confirmation from Dangote, LafargeHolcim, HeidelbergCement, Titan, Fairfax and PPC could not be obtained.
PPC shares jumped 2.3 percent to 6.34 rand as of 12:11 p.m. in Johannesburg, the highest level since May 2. That values the company at R10 billion or $780 million.
Interest in the cement maker was sparked after Toronto-based Fairfax offered to buy R2 billion of PPC’s shares and support a merger with AfriSam earlier this week. The proposal “significantly undervalued” the business, PPC said at the time.
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 R2 billion worth of PPC shares at R5.75 each.
PPC’s current share price of R6.34 suggests investors expect a higher offer to emerge.
The Fairfax proposal would give the Canadian company a stake of more than 30 percent in the combined entity, and that the value of the bid would rise when savings generated by sharing PPC and AfriSam infrastructure are taken into account, according to reports.
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.
Separately, PPC said it had reduced capital expenditure targets for fiscal years 2018 and 2019. The company sees spending of as much as R900 million in year through March 2018, rising to as much as R1 billion the following year, PPC said in a presentation to investors on Friday. The cement maker also said debt would probably fall in the current year.
Frontpage December 11, 2017