South African cement producer PPC’s board on Wednesday turned its back on a takeover attempt by AfriSam, backed by Canadian firm Fairfax Africa Investments, but PCC said it was still talking to CRH and LafargeHolcim.
PPC has been a takeover target on-and-off for several years, with locally-based AfriSam, Nigeria’s Dangote Cement, Irish building materials company CRH and Switzerland’s LafargeHolcim all interested in it.
But in a move anticipated by analysts, PPC’s independent board said it had advised Fairfax that it will not be recommending the Canadian firm’s partial offer to shareholders and that it will not convene a general meeting to approve the proposed merger by AfriSam.
“The Independent Expert … is of the opinion that the partial offer, both in the context of the proposed merger as well as on a stand-alone basis, is not fair and reasonable,” PPC said in a statement.
Fairfax offered to buy 22 percent of PPC in September for 5.75 rand per share, or 2 billion rand (US$144 million), on condition that it was approved by shareholders in order to allow AfriSam’s merger plan.
PPC, which has operations in six countries across Africa, said the board took into account the cement producer’s own valuation work, forecasts and recent financial and business performance as well as feedback from shareholders.
Shares in PPC, which has a market capitalisation of 10.29 billion rand and had net debt of 4.7 billion rand at the end of March, were up 2.47 percent to 6.63 rand by 1248 GMT.
It said it will continue its engagements with CRH and LafargeHolcim.
Update: Fairfax Africa, an affiliate of Canada’s Fairfax Financial Holdings Ltd, raised US$500 million earlier this year to invest public equity, private equity and debt in African businesses.
(Reporting by Nqobile Dludla; Editing by Mark Potter and Alexander Smith)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo courtesy of Reuters/Akintunde Akinleye