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Shareholders set to approve Lafarge’s business consolidation

By on July 6, 2014

Shareholders of Lafarge Cement WAPCO Nigeria Plc (Lafarge WAPCO) will next Wednesday give their approval to the proposal by Lafarge Group to consolidate its operations in Africa.

Lafarge had last month announced its intention to  create a leading sub- Saharan Africa  platform by transferring  its shareholdings in businesses in Nigeria and South Africa to Lafarge WAPCO.

Upon consolidation, the new entity, Lafarge Africa, will be 73 per cent owned by Lafarge Group and will remain listed on the Nigerian Stock Exchange (NSE).

The company explained that under the proposed transaction terms, Lafarge Group will transfer its direct and indirect shareholdings in Lafarge South Africa Holdings (Pty) Limited (100 per cent – representing 72.4 per cent of underlying companies in South Africa), United Cement Company of Nigeria (UNICEM) Limited (35 per cent), Ashaka Cement (58.61 per cent) and Atlas Cement Company Limited (100) to Lafarge WAPCO.

THISDAY checks yesterday showed that the shareholders of Lafarge WAPCO are set to approve the proposal at the company’s annual general meeting in Lagos.

One of the excited shareholders of the company, who is a member of the Independent Shareholders Association of Nigeria (ISAN), Mr. Moses Igbrude said: “This is a positive development that will create value for us as shareholders and we are going to give it all the needed support next week.”

He added: “It will  prepare them for competition and make them big in the industry. It will bring efficiency in resources usage because all the subsidiaries will be under one management.”

Capital market analysts have been bullish on the consolidation saying it holds very good prospects.

For instance, analysts at CSL Stockbrokers had said the consolidation, with a unified management across four businesses in Nigeria, is much better positioned to deliver growth than Lafarge WAPCO as a stand-alone company.

Similarly, analysts at London based Exotix Frontier Equities, said the  asset combination offers a good opportunity for investors to increase their exposure to cement names operating in Nigeria.

“Earnings accretion from 2016 forecast  reassures us about the benefits for minority shareholders  should they support the project,” they said.

Market analysts said with the consolidation, Lafarge Africa will have geographical and product diversification and a much stronger balance sheet.

“It also brings on board the advantages of combining the South African business with stable cash flows with the Nigerian business with high growth potential,” they added.

 

 

[This Day]