The decision by PPC to not pursue a transaction with LafargeHolcim draws to an end a process embarked on by the independent board of the company to consider several expressions of interest in transactions with the company.
LafargeHolcim had submitted a non-binding expression of interest that contemplated a combination of certain African assets, a partial cash offer and a special dividend.
Earlier this week Toronto Stock Exchange-listed Fairfax Africa withdrew its 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, while last week Dublin-based CRH withdrew its interest in submitting an all-cash proposal to acquire a controlling stake in PPC.
Dangote Cement, Africa’s biggest cement producer, withdrew its interest in October.
PPC said yesterday that the independent board of the company had decided after careful consideration of all relevant factors that the company’s shareholders’ value was “best served by optimising its current business strategy”.
This most notably included prioritising the successful development of its existing investment pipeline in the rest of Africa, executing its mega plant strategy in South Africa and embarking on a renewed optimisation programme to further improve competitiveness in a subdued market.
Previously, PPC described the various bids for a merger or stakes in the company as “opportunistic” and stressed that the expressions of interest undervalued the company.
The company’s expansion into Africa has resulted in it already commissioning a new cement plant in Rwanda and a cement mill in Zimbabwe, with the testing and commissioning of new plants in Ethiopia and the Democratic Republic of Congo (DRC) expected by the end of its financial year, March 2018.
Johan Claassen, PPC's interim chief executive, confirmed to Business Report last month that PPC was planning to build a new mega factory in the Western Cape. Yesterday PPC said its board had approved a framework for a top-up BEE transaction to restore its BEE equity shareholding of its South African operations and address its non-compliance with the Mining Charter.
It said this transaction would result in PPC achieving an effective 30percent BEE equity shareholding of its South African operations. This would comprise a proposed BEE transaction in terms of which a broad-based group comprising employees, communities and black entrepreneurs would acquire a 24.6percent equity shareholding in PPC South Africa.
The existing residual two BEE equity shareholding transactions undertaken in 2008 and 2012, which contribute indirectly to an effective 5.4percent BEE equity shareholding in PPC South Africa, would increase the overall BEE equity shareholding to 30percent.
PPC said the transaction would be based on intrinsic value rather than the market price of the listed shares, which were susceptible to normal market volatility, and would be funded through a notional vendor funding structure.
The tenure for the transaction was evergreen for the community trust and 10 years for both the employee stock ownership plan and black entrepreneurs.
PPC expects to announce the detailed terms of the proposed BEE transaction in the first quarter of next year.
Shares in PPC dropped 8.07percent yesterday to close at R5.81 on the JSE.
- BUSINESS REPORT