AfriSam has proposed a merger with rival PPC Ltd, South Africa’s biggest cement and lime manufacturer. The proposal is conditional and non-binding and led to a surge in share prices for PPC, which has seen its value drop in recent weeks during a public dispute among board members during which CEO Ketso Gordhan resigned from the company.
PPC is said to be considering the proposal, which would give the combined companies a market share of close to 60% in South Africa, according to the ex-CEO, who spoke to Bloomberg. This would likely give rise to competition concerns by South Africa’s Competition Commission.
Afrisam’s owners, Public Investment Corp., said that a merger ‘would create a formidable cement player’ that ‘will contribute meaningfully to South Africa and the continent’s developmental plans’. The group owns 66% of Afrisam and 12.57% of PPC.
“This deal would help the combined group to close one or two less efficient plants and focus on overlaps,” Wayne McCurrie, a money manager at Johannesburg-based Momentum Asset Management, told Bloomberg. “There is excess cement capacity in South Africa and consolidation in an industry with excess capacity is not unusual.”
Edited from various sources by Katherine Guenioui
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