Billionaire, Aliko Dangote has thrown his hat in the race to acquire a controlling stake in South Africa’s PPC Group Limited. Canada’s Fairfax holdings is a front-runner, with a proposal to merge PPC with Afrisam, its South African subsidiary. Cement giants Lafarge and Hiedelberg are also interested in taking over the company.
In a notice to the Nigerian Stock Exchange, Dangote Cement said discussions with PPC limited were still at the preliminary stage.
Why Dangote is interested
The acquisition would enable Dangote cement consolidate its position as the largest cement producer in Africa. Dangote cement has a production capacity of 45 million tonnes per annum across 10 plants in Africa. The company had recently signalled its intention to expand capacity of several of its plants.
The acquisition would be a faster means of expansion than building a new factory. Dangote Cement already has existing operations in the country through the Sephaku Cement which was established in 2014 and has a production capacity of 3 million tonnes per annum. Acquiring a stake in the company would thus increase its market share in the Southern Africa cement market.
South Africa’s Public Investment Corporation (PIC) which is a dominant shareholder in PPC could also be disposed to an offer from Dangote Cement. PIC bought a 1.5% stake in Dangote Cement for $289.3 million in 2013.
PPC Limited was established in 1892 and is a leading supplier of cement and related products in southern Africa. The company has 11 cement factories in South Africa, Botswana, DRC, Ethiopia, Rwanda and Zimbabwe with production capacity of around eleven and a half million tonnes of cement products each year.