As the cement market continues to get more competitive, Lafarge Group has decided to merge its South African business with its publicly traded Nigerian unit, Lafarge Wapco to create Lafarge Africa Plc on the Nigerian Stock Exchange (NSE).
This announcement comes on the heels of an agreed $50 billion merger between Lafarge group, the world’s second-largest cement producer with operations in 64 nations and Zurich-based Holcim Ltd. to become the world’s biggest cement producer. The merger is expected to be completed in 2015.
The business consolidation will see Lafarge Africa Plc become the sixth highest capitalised company on the Nigerian bourse.
“The consolidation will enable the enlarged entity to accelerate growth on the continent and expand its product offering in South Africa across the region,” Wapco’s CEO Guillaume Roux said at a Press conference.
Chairman of the Nigerian unit, Olusegun Osunkeye also added that the merger would provide growth access in two of Africa’s largest economies.
“It will mean that our shareholders are invested in a larger and more geographically diverse business,” said Osunkeye.
The cement industries in Nigeria and South Africa are expected to grow by 14 percent and 4 percent respectively over the next five years.
Roux said the deal which is worth $1.35 billion will see Lafarge group get $200 million cash payment and 1.4 billion new shares in Lafarge Wapco. The group will also hold 73 percent shares of the new company.
Nigerian-based investment bank Chapel Hill Denham served as the financial adviser on the merger while Standard Chartered Bank was the independent valuation adviser on the deal.
The deal is however expected to close finally before the end of this year as it is still subject to approval by shareholders and regulators.