Kalambaina Cement is a wholly owned subsidiary of BUA Cement Company of Nigeria whose cement plant produces up to 1.5 million metric tonnes per annum.
The merger is expected to strengthen the stronghold of CCNN in the northern Nigeria cement market.
CCNN in a letter to NSE asserted that;
“the proposed merger provides a compelling opportunity to capture significant synergies and create value for the benefit of the shareholders of both companies in the form of stronger competitive position of the enlarged company, economies of scale, enhanced operations and administrative efficiencies which are expected to accrue from the proposed merger.”
The combined company will have a total cement producing capacity of 2 million metric tonnes which will help increase their market share and solidify their position as a major producer of cement in Nigeria.
Both companies currently operate in Sokoto and are located in the same axis which will make the company integration relatively easy.
CCNN stock has been a highflyer this year, returning 147 percent. The stock jumped 4 percent yesterday on official announcement of the proposed merger as investors cheered the news.
CCNN reported a strong growth in revenue and profit in their 2017 annual report. Profit after tax for the company in 2017 increased by 157 percent from its 2016 level while revenue increased modestly by 39 percent.
The company has already shown sustained growth in profitability in the first quarter of 2018 as company profits increased 111 percent quarter on quarter.
A merger of both companies could push the company to perform even better in future years as the firm ramps up production after the merger process is completed.
CCNN proposed that for each share in Kalambaina Cement Company Limited, shareholders of Kalambaina Cement will receive approximately 198 ordinary shares in CCNN.
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