Dangote Cement Plc has approached PPC Ltd. about a takeover deal, signaling the start of a possible bidding war for South Africa’s biggest cement maker after an earlier offer led by Canada’s Fairfax Financial Holdings Ltd.
Dangote told PPC’s board that it’s interested in buying “the entire share capital,” the Lagos-based company said late Wednesday in a statement to the Nigerian Stock Exchange. “This communication is still at the preliminary stage,” the cement maker said.
The approach by the company owned by Aliko Dangote, Africa’s richest person, follows a joint offer from Toronto-based Fairfax and PPC’s domestic rival AfriSam Group Pty Ltd. While PPC will consider all bids, the Public Investment Corp., its largest shareholder, supports a tie up with AfriSam and Fairfax, people familiar with the matter said earlier this week. LafargeHolcim Ltd., the world’s biggest cement maker, is also monitoring PPC’s situation, the people said.
“Dangote has the capacity to pull the deal off,” Pabina Yinkere, an analyst at Vetiva Capital Management, said by phone from Lagos. “It is a very liquid company with a very strong cash flow. It is a good strategy that would help Dangote consolidate leadership in the South African market.”
PPC shares fell 0.3 percent to 5.96 rand by close in Johannesburg on Wednesday, paring gains in the past month to 59 percent and valuing the company at 9.5 billion rand ($721 million). Dangote, listed in Lagos, has a market capitalization of $9.9 billion.