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AfriSam proposes merger with PPC

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World Cement,

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.”

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