JOHANNESBURG - Only LafargeHolcim, one of four initial potential bidders for a stake in listed cement and lime producer PPC, remains.
This follows Toronto Stock Exchange listed Fairfax Africa, which in September indicated a firm intention to make a partial offer to acquire a R2billion stake in PPC that was conditional on a proposed merger with rival cement producer AfriSam, withdrawing its partial offer.
Shares in PPC reacted to the withdrawal of the partial offer and declined, dropping by 0.61percent on the JSE yesterday to close at R6.55.
Fairfax Africa’s withdrawal of its partial offer followed Dublin-based CRH, the diversified international building materials company listed on the London, Dublin and New York stock exchanges, with a market capitalisation of 27bn (R432bn), last week withdrawing its interest in submitting an all-cash proposal to acquire a controlling stake in PPC.
Dangote Cement, Africa's biggest cement producer, in September also reported that it was considering a merger with PPC, but indicated the following month it was withdrawing its offer.
PPC interim chief executive Johan Claassen said last month that PPC viewed the increased interest from other companies in merging or acquiring a significant stake in PPC as opportunistic.
Sibonginkosi Nyanga, an analyst at Momentum Securities, said yesterday that most analysts believed Fairfax’s offer undervalued PPC and PPC’s Africa expansion story was now “compelling”.
Nyanga said everyone was surprised by the margins PPC was able to achieve, adding that Rwanda was in a position to improve its numbers further while double digit growth in revenue and operating profit in Zimbabwe was expected.
PPC’s independent board last month reported that it had decided not to recommend Fairfax Africa’s offer to shareholders.
In terms of the offer, Fairfax indicated a firm intention to make a partial offer to acquire ordinary shares to the value of R2bn in PPC at an offer price of R5.75 a share.
PPC declined to recommend Fairfax Africa’s partial offer to its shareholders after Investec Bank, which was appointed by PPC’s independent board as its independent expert to provide a fair and reasonable opinion on the partial offer, decided that the offer both in the context of the proposed merger with AfriSam and on a stand-alone basis, was not fair and reasonable.
But even prior to receiving the opinion from Investec Bank, PPC said its preliminary opinion was that the company’s shares were undervalued at R5.75 and did not constitute sufficient compensation for PPC shareholders.
Extension
The Takeover Regulation Panel had granted Fairfax an extension until December 12 to post its partial offer circular to shareholders.
PPC said yesterday that its independent board had on Friday received Fairfax’s formal notification that it would not proceed with the partial offer and the Fairfax partial offer circular would therefore not be posted to PPC shareholders.
PPC yesterday renewed its cautionary announcement.
This relates to PPC last month reporting that it had received a non-binding expression of interest from LafargeHolcim that contemplated a combination of certain African assets, a partial cash offer and a special dividend.
The company said its independent board continued to engage with LafargeHolcim about its approach, but warned that these engagements may or may not lead to a firm intention to offer.
PPC therefore advised its shareholders to continue to exercise caution when dealing in the company’s securities until a further announcement was made.