The board of Lafarge Africa Plc has approved initial agreement by its affiliate, Nigerian Cement Holdings (NCH) B.V., to buy out minority stake in United Cement Company of Nigeria (Unicem) Limited and make the Calabar-based cement company a wholly-owned subsidiary of NCH.
Regulatory filing obtained yesterday by The Nation showed that NCH, a 50 per cent affiliate of Lafarge Africa Plc, is expected to fully consummate the acquisition on or before February 2016. NCH had earlier this month entered into an agreement with Flour Mills of Nigeria (FMN), defining a roadmap to purchase Flour Mills of Nigeria’s 30 per cent investment in Unicem.
NCH currently has 70 per cent equity stake in Unicem. Upon completion of the transaction, NCH will have a 100 per cent stake in Unicem.
According to the report, the acquisition, which comprises sale of shares and the transfer of loans, is structured in two approximately equal tranches – with first tranche payable during first quarter of 2015 and the second tranche due no later than February 29, 2016.
The transaction is priced within a range of between N47 and N55 billion, depending primarily on the effective dates of payment and prevailing dollar-Naira exchange rate at the time of payment.
Transaction advisers have said the valuation for Unicem was consistent with its fair market value and was in line with the previous valuation of Unicem in the previous transfer to Lafarge Africa.
The report indicated that Lafarge Africa plans to use Unicem to further deepen its geographical strength in the South-South axis.
According to the report, the acquisition is in line with Lafarge Africa Plc’s continued investment in Nigeria to accelerate the growth and development of its business, with a focus on serving its customers and delivering value through provision of innovative products and services with a strong geographical spread.
Meanwhile, the management of Unicem will continue to be shared between Lafarge and Holcim while Flour Mills will retain its representation on the board of directors until the second tranche of the transaction is consummated.
Lafarge had on July 9, 2014 received overwhelming shareholders’ approval to consolidate its cement businesses in Nigeria and combine these with South African operations to create a leading sub-Saharan building materials giant to be known as Lafarge Africa Plc.
The consolidation was done by transferring Lafarge’s assets in South Africa and Nigeria to Lafarge Cement Wapco Nigeria Plc, which was subsequently rebranded as Lafarge Africa.
Under the transaction, Lafarge Group transferred its direct and indirect shareholdings in Lafarge South Africa Holding Limited of 72.4 per cent and its equity stakes in three other cement companies in Nigeria-United Cement Company of Nigeria Limited, 35 per cent; Ashaka Cement Plc, 58.61 per cent and Atlas Cement Company Limited, 100 per cent to Lafarge Wapco for a cash consideration of $200 million and the issuance of some 1.4 billion Lafarge Africa shares to the Lafarge Group.