The Cement Company of Northern Nigeria Plc (CCNN), also known as Sokoto Cement, announced plans to merge with Kalambaina Cement Company Ltd owned by Bua cement. This was made known in a letter written to the Nigerian Stock Exchange by the company secretary of The Cement Company of Northern Nigeria Plc.
According to the letter, the merger is subject to various approvals. If approved, the combined entity will have a total installed capacity of 2 million metric tonnes per annum. CCNN owns a 500,000 metric tonnes per annum Sokoto Cement Plant while Bua owns and operates a newly built 1.5million tonnes per annum Kalambaina Cement plant in Sokoto State.
“Over the years, we have always delivered exceptional value to all stakeholders and this Proposed Merger is in continuation of that,” said the Managing Director, CCNN, Ibrahim Aminu. “We have consistently outperformed the industry in key metrics such as capacity utilization but growth has been hampered over the years due to limited expansion and lack of alternative fuel sources. Kalambaina Cement’s 1.5million metric tonnes per annum multi-fuel (coal, heavy oils and gas) powered cement plant solves that issue with limited downtime and further opportunities for growth and expansion.”
By utilizing the more modern plant and equipment of the Kalambaina Cement Company Ltd. to boost its market penetration and export potential this proposed merger will help position CCNN for better competitiveness within its home market. This merger will also see Dangote’s major cement competitors strengthen their foothold across northern Nigeria most especially in Sokoto and its environ.
The letter further stated that for the proposed merger, the shares of CCNN will be issued and allotted to all shareholders of Kalambaina Cement in exchange for their shares in Kalambaina Cement at an agreed ratio based on CCNN’s 30-day volume weighted average closing price (VWAP) to June 22, 2018 of N25.99 per share. By this each shareholder in Kalambaina Cement will be entitled to 19,811,372 new ordinary shares of CCNN for every 100,000 shares of Kalambaina Cement.
Currently, CCNN’s stocks are trading on the floor of the NSE and it would be recalled that in April, the founder of BUA group Abdulsamad Rabiu his group plans to list Bua Cement on the Nigerian Stock Exchange as soon as they meet the listing requirements. In terms of price appreciation, last year, CCNN was the best performer with a 94.4 percent increase in price while Dangote Cement took the 2nd position with a 12.17 percent gain.
It is also worthy to note that in 2010, BUA International Limited acquired Damnaz Cement Company Limited and became indirectly the majority shareholder in CCNN and its technical partner.