JOHANNESBURG - AfriSam Group is in negotiations with an equity partner to recapitalise the company and enable South Africa’s second-biggest cement maker to push through a merger with larger rival PPC, according to two people familiar with the matter.
Closely held AfriSam has a letter of intent from an investment company based in the Americas that is willing to put up new funding, said the people, who asked not to be named as the talks are private.
The deal could be concluded within the next 12 weeks, they said. The people declined to name the potential investor as an agreement may not be reached. PPC shares rose 4.69% on the JSE yesterday to close at R5.13, valuing the company at R8.17 billion.
The prospect of a partner with more financial strength could enable AfriSam to put forward a new merger proposal to PPC that would be more attractive to management and shareholders in the Johannesburg-based company.
After the collapse of a second round of talks last week, PPC gave AfriSam until close of business on Friday to come up with a way to resolve the impasse.
The two sides have previously failed to agree on how to value the deal and who will control the combined entity.
If PPC management including chief financial officer Tryphosa Ramano remain resistant to a merger, AfriSam could attempt a hostile takeover, the people said.