Canada's Fairfax offers $154 mln for 22 pct of South Africa's PPC (updated)

Helios Fairfax Partners

04/09/2017 15:21

(Adds details) 
    JOHANNESBURG, Sept 4 (Reuters) - Canada's Fairfax Africa 
Holdings < FAHu.TO  has offered to buy 22 percent of South 
African cement maker PPC Ltd  PPCJ.J  for 2 billion rand ($154 
million), a cash injection aimed at strong-arming the debt-laden 
company into a tie-up with its nearest unlisted rival AfriSam. 
 AFRSMV.UL  
    In August, PPC said Afrisam intends to make a new proposal 
on a merger of the two South African cement makers after AfriSam 
terminated its current plan.  urn:newsml:reuters.com:*:nL8N1LB2O8  
    Fairfax, through its regional unit, said the offer to buy 
into PPC, at 5.75 rand per share, was subject to the PPC board 
recommending it as fair and reasonable and its shareholders 
voting in favour of AfriSam's bid, PPC said on Monday 
    The Fairfax offer is also subject to the completion of an 
all-share merger between Afrisam and PPC that values PPC at 
about 9.2 billion rand, or 5.75 rand per share, and AfriSam at 
an enterprise value of 7.5 billion rand.  
    But PPC independent board, created to assess the Afrisam 
merger, was of the view that the proposal "fundamentally 
undervalues PPC".    
    PPC also said it had received other offers from trade 
bidders, one of whom included a potential cash component, to 
create a pan-African cement giant. It did not name the bidders, 
saying the talks are confidential. 
    It added that the proposals were "credible and potentially 
value-enhancing for shareholders to merit careful 
consideration."  
    With around 5 billion rand in net debt and about 1 billion 
rand in cash, PPC did not declare a dividend in the year to end 
of March, saying it needed the money to pay down borrowings 
jacked up by years of expansion elsewhere on the continent.  
    The merger, if it happens, would create a group with more 
financial muscle that would be able to compete globally, with 
assets across six African countries. 
    AfriSam, which is majority owned by the Public Investment 
Corporation pension fund, first proposed a merger in 2014 when 
PPC's share price had been under pressure due to infighting 
between its board and former chief executive. 
($1 = 12.9520 rand) 
 
 (Reporting by Nqobile Dludla,; Editing by Tiisetso Motsoeneng 
and Ed Osmond) 
 ((nqobile.dludla@thomsonreuters.com; +27117753126; Reuters 
Messaging: nqobile.dludla.thomsonreuters.com@reuters.net)) 
 
Keywords: PPC M&A/AFRISAM