Shareholders of Ashaka Cement PLC have voted to sell off their stake in the company to Lafarge for the sum of N604 million being the current market value of their shareholding. This has pushed up the competition in the cement sector of the Nigerian economy. The total value the company is put at N5.97 billion. The shareholders of Ashaka Cement, in an Extra-Ordinary General Meeting in Abuja, agreed to allow Lafarge increase its stake in the company from 86.51 per cent to 99.99 per cent, making the company a wholly-owned subsidiary of Lafarge.The deal, Ashaka Cement said, is however, subject to approval by the regulatory authorities.
With this, Bruno Bayet, Chief Financial Officer of Lafarge Africa said the minority shareholders of Ashaka now have the opportunity to be part of Lafarge Africa with total installed production capacity of over 14 million metric tonnes per annum and strong growth prospects.
Also speaking, Michel Puchercos, Chief Executive Officer, Lafarge Africa said, “We remain committed to Ashaka in good times and in bad times because we have a long-term view of our investments. Ashaka cement as a brand has for decades become synonymous with housing and infrastructural solutions in the entire north. We shall maintain that legacy of quality even in the face of temporary setbacks.”
Speaking in the same vein, Acting Chairman of Ashaka Cement, Mrs. Edith Onwuchekwa, said that in the scheme of arrangement, shareholders of the company would receive 57 Lafarge shares for every 202 Ashaka shares, in addition to a cash consideration of N2 for each of the shares.
She said the Scheme represents a total value of N19.78 per Ashaka Cement share , a 26 per cent premium to the N15.74 consideration stipulated by the Nigerian Stock Exchange, NSE, and a 16 per cent premium to the last traded share price of Ashaka Cement of N17.08.
The deal was predicated at a price of N63 per Lafarge Africa share, as at August 11, 2017. She said the decision to undertake the ‘Scheme of Arrangement’ for the reorganisation of its capital was to address issues of illiquidity of its shares and due to the dislocations in the country’s financial sector which has helped in no small measure in stifling equity capital raising programme.
According to her, the Scheme became necessary following the delisting of the company in July 2017, which curtailed the ability of its shareholders to liquidate their shareholding. She further said that the scheme was also in view of the seeming difficulties that Ashaka Cement envisaged it would encounter in raising, through an equity transaction, additional capital required over the next two to three years to meet its expansion plans and maintain its competitive advantage in the cement manufacturing industry.
Onwuchekwa disclosed that Ashaka Cement intends to re-invest and utilize any cash generated from existing assets to partly fund its expansion plans, warning though, that this would restrict its ability to pay dividends to shareholders in the short to medium term. She said, “There, the Board of Directors has, after careful consideration of the company’s current corporate structure, the expansion plans and the funding requirements for the company’s business; formed the view that a Scheme of Arrangement reorgamising the shareholding structure of the company is in the best interest of both the company and its shareholders.”
In addition, the acting chairman said the share consideration involving giving the shareholders Lafarge Share, offers Ashaka Cement shareholders a continuing opportunity for capital appreciation through the issuance of future bonus shares and dividends. She also said that with Lafarge shares, shareholders would be offered the opportunity of revenue diversification by geography, given Lafarge Africa’s operations in Nigeria, South Africa and Ghana; as well as revenue diversification by plant location. “The implementation of the Scheme will ease the speed and the cost at which Ashaka Cement can attract capital to fund its expansion plans,” Onwuchekwa said.
