PPC turns down Fairfax, Afrisam deal off

Published: 23 November 2017

South Africa-headquartered cement producer PPC Limited's board has rejected an offer by Fairfax Africa Investments to buy a stake in the company.

The rejection has basically put an end to a merger proposal between PPC and its rival AfriSam.

The PPC board announced yesterday that it will not recommend Fairfax partial offer to its shareholders.

The board members are not happy with Fairfax's offer to buy R2 billion of PPC ordinary shares at R5, 75 per share, which is significantly lower than the R8 to R10 fair value approved by shareholders.

"The independent board advises shareholders that, having completed its process of considering the terms and conditions of the partial offer, it has resolved not to recommend to shareholders that they accept the partial offer.

The independent board has reached this resolution taking into account various considerations including, amongst other things, the views of the independent expert, PPC's own valuation work, PPC forecasts and recent financial and business performance, the need for payment of a control premium, feedback from shareholders and the independent board's assessment of risks associated with the partial offer, said PPC in a notice.

"The independent expert, having considered two possible outcomes of the proposed merger (such being the proposed merger being implemented as opposed to the proposed merger not being implemented) is of the opinion that the partial offer, both in the context of the proposed merger as well as on a standalone basis, is not fair and reasonable.

"The independent board has today advised Fairfax that it will not be recommending the partial offer as required by the recommendation condition, and that PPC will not convene a general meeting of the shareholders for purposes of approving the proposed merger."

The PPC board also turned its back on a merger with AfriSam as it will not convene a meeting to approve the proposed merger.

Earlier PPC shareholders – who own about 25 percent of the cement producer – rejected the merger proposal saying it "undervalued the group," "undermined its growth potential."

The shareholders said PPC was better as a stand-alone company.
- bh24

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