CRH is among companies considering a counterbid for PPC that could trump an offer by Canada's Fairfax Financial Holdings, according to people familiar with the matter, adding a potential new twist to the battle for South Africa's largest cement maker.
The Irish building-materials supplier has held early deliberations about pursuing an acquisition of the Johannesburg-based company, said the people, who asked not to be identified as the plans aren’t public. A final decision hasn’t been made and the company may decide against an offer in favour of US acquisitions, the people said. PPC has a market value of 11 billion rand (€689 million).
Issues yet to be settled include how the Dublin-based company would address the requirement of a black economic empowerment deal, a way to comply with South African government initiatives to redistribute wealth to those discriminated against during apartheid, one of the people said. The takeover would also likely require support from state-owned Public Investment Corp, Africa's biggest money manager and a top shareholder in PPC.
Spokespeople for CRH and PPC declined to comment.
PPC’s future as an independent company has been clouded for months after talks about a tie-up with rival AfriSam Group failed and Toronto-based insurer Fairfax made a partial offer for 2 billion rand of PPC stock at 5.75 rand a share.
Fairfax's offer is conditional on PPC merging with AfriSam, and the South African company has appointed Investec to review the proposal. Dangote Cement, Nigeria's biggest company, considered making a counteroffer but withdrew its interest last week.
PPC said earlier this month that it had received two “credible indicative proposals” as well as the Fairfax offer, one of which was from Dangote. It didn’t identify the third potential bidder.
CRH is just one of a number of parties considering whether to bid for PPC, one of the people said. Bloomberg News reported in September that LafargeHolcim, HeidelbergCement and Titan Cement of Greece were also monitoring PPC's situation.
A CRH bid for the South African company would open a new front for the Irish company that has emerged as a consolidator in the global building materials industry. CRH agreed last month to take over Ash Grove Cement of the US for $3.5 billion, but earlier this week, Denver-based construction supplier Summit Materials made a rival bid.
The market has been the focus of deals for the past two years following the creation of LafargeHolcim. More recently, Germany's HeidelbergCement agreed to acquire Italian assets from Cementir Holding.
PPC shares have gained 26 per cent this year, which has been dominated by on-off merger talks with AfriSam. The two companies have discussed a combination to strengthen their balance sheets, cut operational costs and deal with the challenge of lower domestic demand and cheaper cement prices.
-(Bloomberg)
