Lafarge, French cement maker, plans to combine its South Africa business with Nigerian unit Lafarge Wapco. This will see the cement maker list its Africa interests together on the Lagos bourse. The deal, which is still subject to shareholders’ and regulatory approvals, is expected to close in the second half of the year.
According to Reuters, Mr. Guillaume Roux, the Lafarge Nigeria CEO, said the deal, worth US$1.35bn, will see the Lafarge group get US$200m in cash and 1.4-billion new shares in Lafarge Wapco to effect the merger.
The new company Lafarge Africa will have a market capitalization of over US$3bn listed on the Nigerian Stock Exchange with Lafarge group owning 73% of the combined entity. The combined company would seek to boost capacity by 5.5-million tonnes to 17.5-million tonnes after the merger.
According to Roux the consolidation will enable the enlarged entity to accelerate growth on the continent and expand its product offering in South Africa and across the region.
He revealed that Standard Chartered Bank and Nigerian-based investment bank Chapel Hill Denham are advising it on the merger adding that Lafarge Africa will become the sixth most capitalized company on the Nigerian bourse.
Lafarge faces intense competition in Africa, especially from its arch rival Dangote Cement. The firm, Nigeria’s biggest with a market capitalization of around US$24bn, is set to roll out cement plants across Africa.
Lafarge owns 60% in Lafarge Wapco, its listed subsidiary in Nigeria, 58.6% in another Nigerian listed firm Ashaka Cement and 100% equity holding in Atlas Cement Company limited. It shares joint ownership with Holcim of privately-held United Cement Company of Nigeria. It owns 100% of the Lafarge South African business.
