Africa’s
richest man, Aliko Dangote is reportedly considering counter-offers for
PPC Group Ltd. that could signal a bidding contest for South Africa’s
largest cement maker, according to people familiar with the matter,
according to reports by Bloomberg...
Dangote
Cement Plc sees a bid for the Johannesburg-based company as a way to
accelerate expansion outside its home market of Nigeria, said the
people, who asked not to be named as the matter is private.
PPC
will consider any rival offers to the joint approach by Canada’s
Fairfax Financial Holdings Ltd. and domestic rival AfriSam Group Pty
Ltd. and present them to shareholders in early October, one of the
people said.
PPC shares jumped 2.9 per cent to 6.38 rand as of 3:30 p.m. in Johannesburg, on track for the highest on a closing basis since April 25. That values the company at 10.2 billion rand ($792 million).
LafargeHolcim
Ltd., the world’s biggest cement maker based in Jona, Switzerland, and
Germany’s HeidelbergCement AG are also monitoring PPC’s situation, the
people said. Titan Cement Co. SA of Greece is also looking at the South
African company, according to one of the people. The cement makers’
interest was sparked after Toronto-based Fairfax offered to buy 2
billion rand of PPC’s shares and support a merger with AfriSam earlier
this week, the people said. The proposal “significantly undervalued” the
business, PPC said at the time.
Spokespeople for Dangote, LafargeHolcim, HeidelbergCement, Titan, Fairfax and PPC declined to comment.
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 6.38 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.
Aliko
Dangote, who has interests in sugar, flour and packaged food businesses
as well as cement, has a net worth of $11.4 billion, according to the
Bloomberg Billionaires Index.
Dangote
would be open to a sale of all or part of its cement operations in
Pretoria-based Sephaku Holdings Ltd. unit to win regulatory approval for
a takeover, two of the people said.
Separately,
PPC said it had reduced capital expenditure targets for fiscal years
2018 and 2019. The company sees spending of as much as 900 million rand
in year through March 2018, rising to as much as 1 billion rand 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.
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