Displaying items by tag: Bid

India: Dalmia Bharat Cement has made an agreement with the Piramal Bain Resurgence Fund to jointly bid for Binani Cement. The deal will see the two companies make an offer for Binani’s two plant in Rajasthan, according to the Economic Times newspaper. Binani Cement has debts of US$530m and the potential buyers are aiming to pay around US$930m. Binani Cement became insolvent following a US$110m royalty payment to state government for its limestone quarries. Other Indian cement producers, including Ultratech Cement, Shree Cement, Nirma, JSW cement and My Home Industries, have expressed interest in the cement producer.

There are two significant cement producers around the world up for sale at the moment. Last week we dealt with India’s Binani Cement, which has so far attracted 15 separate bids from a number of international and domestic players. Now, we turn our attention to South Africa, where PPC remains the target of approaches by LafargeHolcim and CRH.

This week PPC rejected a partial offer from Canada’s Fairfax Holdings, which it considered neither fair nor reasonable. Like a mutual friend at a party that insists two people ‘really are perfect for each other,’ Fairfax had stipulated in its terms that PPC should merge with AfriSam to create a South African super-producer. It does not appear that this idea went down well and that particular combination now seems further away than ever.

When the news broke that it had rejected Fairfax, we thought that PPC’s stance seemed a little ‘too cool.’ However, looking just at the oversized and import-addled South African market does not give the full picture of what’s happening for PPC at the moment. It has significant and growing activities in the rest of Africa too.

Later this week PPC released its results for the first half of its 2018 fiscal year. Suddenly, its handling of the Fairfax offer made more sense. Over the six months to 30 September 2017, PPC nearly tripled its profit to US$21.1m. Crucially, sales from outside South Africa grew far more rapidly than those at home. While domestic earnings before interest, tax, depreciation and amortisation (EBITDA) rose by 4%, EBITDA from elsewhere increased by 25%. These results bode well for a potential bidding war that now favours PPC.

Even from this greatly enhanced position, PPC was not finished with its announcements for the week. Today it revealed that it plans to build a new ‘mega-factory’ in the Western Cape. Johan Claassen, the interim chief executive of PPC, said there would probably be a formal announcement about new capacity in the Western Cape in 2018. He said that PPC had decided to conduct a feasibility study into a possible replacement for its Riebeeck plant. An Environmental Impact Assessment (EIA) is in progress and the plant is reported to be ‘semi-brownfield.’ Claassen said that the new facility would use around 25% of the current Riebeeck equipment and cost US$200/t of installed capacity.

The news of its results and announcement of the new plant represent a good PR move by PPC given the difficulties faced by the wider South African market. The new information will certainly give cause for CRH and LafargeHolcim to think again about the values of their offers, should PPC also be of the view that these also undervalue the company.

South Africa: Ireland’s CRH has submitted a formal expression of interest to PPC towards making a cash offer for a controlling stake in the South African cement producer. The board of PPC has given CRH until the week commencing 20 November 2017 to conduct due diligence and make a firm offer. PPC said that it is still considering an offer from Fairfax Financial Holdings with the aid of Investec. It is also in discussion with LafargeHolcim about a potential deal.

South Africa: Ireland’s CRH is considering making a bid for PPC according to unnamed sources quoted by Bloomberg. However, no final decision has been made and neither CRH nor PPC have commented on the matter. Following an offer made by Fairfax Financial Holdings in September 2017, PPC said that it had received two other offers. Nigeria’s Dangote Cement publicly admitted that it was in talks with PPC but it later withdrew from the bidding process.

South Africa: Dangote Cement has formerly withdrawn from the bidding process for PPC. The Nigerian cement producer confirmed it was in talks with PPC in mid-September 2017 following an offer by Fairfax Financial Holdings.

US: Summit Materials has offered US$3.8bn to buy Ash Grove Cement, according to Reuters. The board of Ash Grove Cement has described the proposal as ‘superior’ to the US$3.5bn bid made by Ireland’s CRH in September 2017. It has extended its so-called ‘shop window’ consideration period with CRH to 20 October 2017.

South Korea: Four companies have been shortlisted to buy a full stake in Halla Cement. Asia Cement, Sungshin Cement, Aju Corporation and LK Investment Partners are all contenders for the sale, according to sources quoted by the Maeil Business Newspaper. Six investors submitted preliminary bids for the cement producer and Halla Cement’s largest shareholder Baring Private Equity Asia and its sales advisor Citigroup Global Market Securities Korea chose the final selection.

The shortlisted companies will have up to six weeks to conduct due diligence procedures before submitting final bids in early November 2017. The seller intends to pick a final bidder by mid-November 2017.

Baring Private Equity Asia and Glenwood Private Equity bought Lafarge Halla Cement from LafargeHolcim in mid-2016 for Euro427m.

South Africa: PPC is seeking a higher offer from Canada’s Fairfax Financial Holdings that has made a bid to buy a stake in it. The cement producer said in a document to shareholders that it anticipated that Fairfax would make a higher bid given ‘the lower offer price on the table’. The Canadian financial company offered US$154m to buy a portion of PPC with the condition that it also merge with AfriSam. PPC also confirmed that it had received a non-binding communication from Nigeria’s Dangote Cement to buy it.

South Africa: Nigeria’s Dangote Cement has confirmed its interest in bidding for PPC. The company said that its board of directors had communicated to the board of PPC but that the dialogue was at a preliminary stage. The offer follows offers by Canada’s Fairfax Financial Holdings with AfriSam and other unnamed bids.

South Africa: PPC’s largest shareholder, the Public Investment Corporation (PIC), has supported an offer from Canada’s Fairfax Financial Holdings and local cement producer AfriSam. PIC views the bid as an opportunity to build a larger cement producer in sub-Saharan Africa, according to sources quoted by the Cape Argus newspaper. The investment body also hopes to make cost savings from the merger. PIC owns about 11% of PPC and it is the biggest shareholder of AfriSam with a 60% stake.