Kenya’s Bamburi Cement has sold its entire stake in Ugandan subsidiary Hima Cement for an estimated $84 million. This raises the prospect of rewarding shareholders with a special dividend after the closure of the deal. The Nairobi Securities Exchange-listed firm announced earlier last week the sale of the subsidiary cement company. The company has sold a whooping seventy percent of its stake to a consortium of Sarrai Group and Rwimi Holdings. The deal was completed after the listed bidders acquired all the regulatory and shareholder approvals. The $84M that Bamburi Cement has accumulated from the deal will be injected into its books. This gives the company room to pay special dividends to its shareholders. This is subject to the capital allocation plans revived by the board and management. It had been promised to the shareholders through the circular that preceded the deal.
The Significance of the Bamburi Cement Ugandan Closure Deal
The completion of the subsidiary sales is of high significance to Kenya’s Bamburi Cement and its shareholders. This is because the proceeds received from the closure of the deal provide an ability for the company to pay special dividends to its shareholders. This is subject to Bamburi’s dividend strategy and receipt of relevant approvals. The cement manufacturing company is expected to soon announce its results for the financial year ending December. The prospect of the transaction deal and the special payout has lifted the company’s share price to current levels of $0.30. The share price is near the 52-week high of $0.31 recorded in February this year. The closure deal also provides an income for the manufacturing company to invest and maintain its stronghold in Kenya’s cement manufacturing industry. Kenya’s Bamburi Cement is in the company of other cement manufacturers such as Simba Cement, all competing in the market.
The Contractors/ Developers Involved in the Closure deal
Kenya’s Bamburi Cement has sold 1,335,600 ordinary shares in Hima Cement Limited. The transaction, which is valued at $120 million, was subject to satisfaction or waiver of certain conditions and approval from the shareholders. This represents 70 percent of the total issued shares. The shares were owned by Bamburi through its parent company, Himcem Holdings Limited. The company has sold these assets to a consortium of Sarrai Group and Rwimi Holdings. Bamburi announced that it has fully divested its proprietary interest in Hima Cement Limited and Hima Cement Limited will no longer be reported as a subsidiary of Bamburi. The remaining 30 percent (572,400 million shares) will be acquired by Swiss firm Cementia Holding AG.
The Plans for the Cement Manufacturing Company
Kenya’s Bamburi Cement seeks to maintain its stronghold in the cement manufacturing industry after recording massive profits post-COVID. It posted a net profit of $14 million in 2021, up from $11 million the previous. The rise was driven by increased sales volume in Kenya and Uganda on account of a solid performance in retail and key accounts segments. The significant increase was also attributed to the continued economic recovery from the impact of the Covid-19 pandemic.
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