Dangote Cement Withdraws Bid for South African Cement Firm
Dangote Cement Plc(DCP), which is the most capitalised company listed on the Nigerian Stock Exchange (NSE) last Friday announced the withdrawal of its interest to acquire the entire share capital of PPC Limited, South Africa’s leading cement firm.
Dangote Cement had last month confirmed that it communicated its interest to acquire the entire share capital of PPC to the board of directors of the South Africa’s firm.
But DCP had explained, though, that the acquisition talks were still at the preliminary stage and the transaction remained a potential transaction.
“Further details will be published subsequently, as appropriate,” the company had stated last month.
However, in a notification to the NSE on Friday, DCP said its board of directors had on October 5, formerly notified the board of directors of PPC that it(DCP) no longer had an interest in acquiring the entire share capital of PPC.
Before now, analysts had said the acquisition of the South African firm would fit into DCP’s expansion strategy and boost its future performance.
DCP had embarked on expansion of its operations to other African countries. And the Chairman of the Dangote Cement, Alhaji Aliko Dangote last May told shareholders that the Pan-African diversification programme provided the essential foreign currency and streams of cash to operate the company despite the challenges that characterised 2016.
According to him, the Nigerian economy fell into recession in 2016, inflation peaked at 18.6 per cent, while resurgence in attacks on oil and gas pipelines in South left Ibese and Obajana factories short of fuel.
He, however, noted that the results of strategic decisions taken a years ago enabled Dangote Cement to strengthen its business and consolidate its position in a year when many others in Nigeria and across the rest of Africa have struggled against economic downturn.
“Our Pan-African diversification has provided cash streams from countries such as Senegal, Cameroon and Zambia, which have provided us with essential foreign currency as foreign exchange controls made it difficult for us to obtain dollars for operations. Furthermore, we were able to borrow money in these countries’ local currencies, thus reducing our exposure to foreign currency shortages in Nigeria. In addition, we began to generate foreign currency sales from exports of cement from Nigeria to Ghana,” Dangote said.
Having delivered improved full-year results for 2016, Dangote Cement Plc recorded another improved performance for half year ended June 30, 2017, sending positive signals to investors to expect another bounteous harvest at the end of the year.