Dangote moves to take over South Africa’s biggest cement maker

Africa’s largest cement maker Dangote Cement Plc. has signified interest in taking over South Africa’s PPC Ltd., in a deal that would further strengthen Dangote’s influence in the African cement industry.

The Board of Directors of DCP has “communicated its interest to the board of directors of PPC with respect to the acquisition of the entire share capital of PPC,” Dangote Cement said in a statement to the Nigerian Stock Exchange.

Canada’s Fairfax Financial Holdings had earlier in the month also made an offer to buy a stake in PPC, in a proposed $154 million deal that also includes a merger with domestic rival AfriSam. While the company said at the time that it had not fully considered the Fairfax offer, it maintained that it was ‘fundamentally’ undervalued.

Dangote’s interest in the cement maker, which is South Africa’s biggest may start off a price war which Dangote Cement, a company owned by Africa’s richest man Aliko Dangote, is almost certain to win. The Nigerian company has the capacity to pull the deal off, and can consolidate leadership in the South African cement market through the acquisition of PPC. However, there are some hurdles that need to be crossed first.

According to Bloomberg, which cited “people familiar with the matter”, PPC’s largest shareholder Public Investment Corp. favours the Fairfax deal.

PPC shares fell 0.3 percent to 5.96 rand by close in Johannesburg on Wednesday. By 9:13 AM GMT on Thursday, the shared had recovered, rising by 3.52 percent to 6.17 rand.