A worker at PPC Cement in Cleveland, Johannesburg. File picture: Supplied

JOHANNESBURG - PPC Chairman Peter Nelson said South Africa’s biggest cement maker has received letters representing “likely more than” 25 percent of shareholders indicating opposition to a proposed merger with local rival AfriSam Group Pty Ltd.

The tie-up “requires 75 percent of shareholders to vote for it and obviously more than 25 percent have a view that they are not going to support it,” Nelson said by phone late Thursday. “We have received the letters, but we are in a process that has to run its course.”

The simmering opposition casts doubt over a partial offer by Fairfax Financial Holdings Ltd. of Canada that was made on condition the South African company merges with AfriSam. Potential counter bidders should be granted enough time to conduct full due diligence, PPC said earlier this week. Nigerian competitor Dangote Cement , which has made an indicative proposal, will be granted a “reasonable period” to decide whether to table a firm proposal, the company said.

Read also: R2 billion bid for PPC stake but based on AfriSam merger

PPC’s Biggest Shareholder Is Said to Back Fairfax-AfriSam Offer The Public Investment Corp. is supporting the Fairfax offer, people familiar with the matter said last month. Africa’s biggest money manager owns about 11 percent of PPC, according to data compiled by Bloomberg. It’s also the biggest shareholder in AfriSam with about 60 percent.

For its part, PPC has said the bid of 5.75 rand a share for 2 billion rand ($146 million) of stock undervalues the business and its prospects. The Fairfax proposal also includes a recapitalization of AfriSam ahead of the merger. PPC has hired
Investec Plc to review the offer. PPC shares fell 0.2 percent on Thursday to 6.45 rand, valuing the company at 10.3 billion rand.

The shareholders’ views were a matter for AfriSam rather than PPC “to reflect on,” Nelson said.

 - BLOOMBERG