Nigeria’s Dangote has withdrawn his takeover bid of South Africa’s cement maker PPC.
PPC said Friday that Nigeria’s Dangote Cement had withdrawn its interest in a tie-up with the South African firm, sending its shares more than 13 percent lower.
Africa’s richest person Aliko Dangote joined the race to buy South Africa’s biggest cement producer in September. PPC is already the subject of an all-share merger bid by local rival AfriSam that values it at $700 million.
“Shareholders are advised that, on 5 October 2017, the Board received from Dangote a formal withdrawal of its interest in respect of the Proposed Combination,” PPC said in a statement.
PPC gave no reason for the move and the Nigerian firm was not immediately available for comment.
Shares in PPC fell 13.64 percent, before recovering some ground to trade 4.34 percent lower at 6.17 rand at 1121 GMT. The price was still above AfriSam’s 5.75 rand offer price.
The interest from Dangote Cement, with a market capitalisation of $12 billion, had raised hopes of a bidding war and pushed PPC’s share price above AfriSam’s offer price.
“The general feeling was that Dangote would provide some sort of stability as well as capital going forward,” Independent Securities trader Ryan Woods told Reuters.
When interviewed in September, Aliko dangote said that the market in south Africa was in need of consolidation, essentially confirming his acquisition bid. despite understanding that there were other bidders, he opined that thinks his company should bid sensibly in a way that will benefit the shareholders of both ppc and dangote cement.
Aliko Dangote also thought PPC wanted a bigger company that will not just seat and consolidate, but actually needs a player who is already in the cement business with the right focus to make the company better. He also admitted that he had no plans of overpaying because overpaying, he says, might be a problem for Dangote shareholders, who are his priority.