AfriSam-PPC talks at make-or-break stage
Negotiations between PPC and AfriSam about a potential merger have reached a make-or-break stage.
This follows AfriSam last Friday confirming that it had cancelled the heads of terms (HOT) it had entered into with PPC regarding a possible merger between the two companies.
Despite the HOT cancellation, AfriSam acting chief executive Rob Wessels said: “AfriSam remains firm that a transaction between AfriSam and PPC will greatly benefit the stakeholders of both companies. For this reason, we continue discussions with PPC and will explore other alternatives available to us.
“It remains our belief that a transaction between the two companies offers the local cement industry an opportunity to develop a local cement champion with the required scale, operational efficiency and balance sheet to enable further investment opportunities in South Africa and the rest of the continent,” he said.
However, PPC chairperson Peter Nelson said they had been involved in the negotiations for six months and there came a time when it was necessary to halt them. Nelson added that the negotiations would only continue beyond this Friday if the new proposal tabled by AfriSam was “of sufficient interest and attraction and fair to shareholders and warranted extending” the negotiations.
He said if PPC did not receive a new proposal from AfriSam, or the proposal it received was not what they were expecting, PPC might terminate the merger discussions at the close of business on Friday.
Nelson said although PPC agreed to give AfriSam another week to table a new proposal, the message it was getting from all its shareholders was that they were worn out by the proposed deal.
Nelson said there were definitely advantages in combining the businesses but this also came with some disadvantages. He added that PPC would not have gone down this path if it did not believe it could overcome any potential objections to a merger by the Competition Commission.
Shares in PPC dropped 7.59% on the JSE on Friday to close at R4.87.