Johannesburg - PPC on Monday entered into formal discussions to assess the merits of a potential merger with Afrisam Group in a bid to create a financially stronger and operationally efficient South African-owned cement producer. Globally, the cement market is dominated by multinational and regional players.
The two cement producers said they had independently concluded that current market circumstances warranted entering into formal discussions to consider the proposed merger.
As part of such discussions, the companies would jointly assess the value they believe can be realised for the shareholders of PPC and AfriSam if the proposed merger is implemented.
If approved, the merged entity is expected to be significantly empowered given that Phembani Group, a major shareholder in AfriSam, and other investors including PPC's existing broad-based black economic empowerment (B-BBEE) shareholders, would own a significant share of the merged entity.
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This would be in addition to PPC's announced intention to implement a further B-BBEE ownership transaction.
PPC recently concluded the Strategic Black Partners (SBPs) and Community Service Groups (CSGs) components of its 2008 B-BBEE transaction, resulting in a cash inflow of R1 billion in December 2016.
In a statement, PPC said the merged entity would be well placed and have the balance sheet capabilities to develop as a major African cement producer, given its complementary production assets in six African countries outside of South Africa.
The parties said they would communicate the outcome of the assessment at a later date.