The conditional partial offer, confirmed by PPC in a stock-exchange announcement, appears to affirm that AfriSam is the bidder in any merger process, with the backing of the African investment unit of Canadian insurance group Fairfax Financial Holdings. It is not clear how competition authorities will view any merger.
The revised merger proposal includes a R4bn recapitalisation of AfriSam prior to any merger with PPC. This is based on a share exchange ratio of 58 PPC shares for 42 AfriSam shares, with PPC's equity value being R5.75 per share. This comes after both companies in late August confirmed that negotiations had been terminated despite AfriSam remaining "committed to a possible combination" of the two South African cement groups.
"We are excited that Fairfax Africa sees the investment potential in the combined company as evidenced by its R4bn investment committed to AfriSam and R2bn partial offer to PPC shareholders," Rob Wessels, acting CEO of AfriSam, said on Monday, 4 September.
"Among other benefits, the investment ... will greatly reduce the underlying debt of the merged entity which will have sufficient liquidity and capital to compete in its current markets and selectively target growth opportunities on the continent," Wessels said.
Source: BDpro
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