A Review of the Nigerian Energy Industry

Lafarge Africa listing to boost NSE market value by over N468bn

Lafarge05 August 2014, Lagos – Following shareholders’ approval and other regulatory processes, Lafarge WAPCO has formally notified the Nigerian Stock Exchange, NSE of the change in its name to Lafarge Africa Plc, paving the way for the impending listing of the consolidated shares, which are expected to boost market value by over N468 billion.

A cross-survey of leading investment experts and advisors showed a strong support for the decision of Lafarge to consolidate its Nigerian and South African businesses under a single entity. They described the move as a strategic move that could change the game plan in the Nigerian investment market, the cement industry and African mergers and acquisitions.

It will be recalled that Lafarge on July 9, 2014 received overwhelming shareholders’ approval to consolidate its cement businesses in Nigeria and combine these with Lafarge South African operations to create a leading sub-Saharan building materials giant to be known as Lafarge Africa Plc.
The consolidation is being done by transferring Lafarge’s assets in South Africa and Nigeria to Lafarge Cement Wapco Nigeria Plc.

Under the transaction, Lafarge Group will transfer its direct and indirect shareholdings in Lafarge South Africa Holding Limited of 72.4 per cent and its equity stakes in three other cement companies in Nigeria-United Cement Company of Nigeria Limited (35 per cent), Ashaka Cement Plc, (58.61 per cent) and Atlas Cement Company Limited (100 per cent) to Lafarge Wapco for a cash consideration of $200 million and the issuance of some 1.4 billion Lafarge Africa shares to the Lafarge Group.

Lafarge Africa, which would retain Lafarge Wapco’s subsisting listing on the NSE is estimated to have an initial market capitalisation of over $3 billion (about N468 billion), making it the 6th largest company on the NSE by market capitalisation.

Equity advisors and market experts in several leading investment firms, which are not involved in the Lafarge transaction, said they believed the emergence of Lafarge Africa would create better values for shareholders through increased dividends and capital appreciation as well as the cement industry through a much more competitive pricing and quality scenarios.

According to them, the Lafarge Africa transaction could encourage other multinationals and Nigerian companies to further explore the potential for mergers and acquisitions, thus stimulating the investment markets and strengthening the Nigerian capital markets.

Investment advisors and analysts at Lead Capital Plc, Cardinal Stone Partners and Sterling Capital Markets among others agreed that the emergence of Lafarge Africa could directly and indirectly boost the Nigerian stock market through increased liquidity and returns on the Lafarge Africa stock and general inducement of mergers and acquisitions.

A cross-survey of leading investment experts and advisors showed a strong support for the decision of Lafarge to consolidate its Nigerian and South African businesses under a single entity. They described the move as a strategic move that could change the game plan in the Nigerian investment market, the cement industry and African mergers and acquisitions.

It will be recalled that Lafarge on July 9, 2014 received overwhelming shareholders’ approval to consolidate its cement businesses in Nigeria and combine these with Lafarge South African operations to create a leading sub-Saharan building materials giant to be known as Lafarge Africa Plc.

The consolidation is being done by transferring Lafarge’s assets in South Africa and Nigeria to Lafarge Cement Wapco Nigeria Plc.

Under the transaction, Lafarge Group will transfer its direct and indirect shareholdings in Lafarge South Africa Holding Limited of 72.4 per cent and its equity stakes in three other cement companies in Nigeria-United Cement Company of Nigeria Limited (35 per cent), Ashaka Cement Plc, (58.61 per cent) and Atlas Cement Company Limited (100 per cent) to Lafarge Wapco for a cash consideration of $200 million and the issuance of some 1.4 billion Lafarge Africa shares to the Lafarge Group.

Lafarge Africa, which would retain Lafarge Wapco’s subsisting listing on the NSE is estimated to have an initial market capitalisation of over $3 billion (about N468 billion), making it the 6th largest company on the NSE by market capitalisation.

Equity advisors and market experts in several leading investment firms, which are not involved in the Lafarge transaction, said they believed the emergence of Lafarge Africa would create better values for shareholders through increased dividends and capital appreciation as well as the cement industry through a much more competitive pricing and quality scenarios.

According to them, the Lafarge Africa transaction could encourage other multinationals and Nigerian companies to further explore the potential for mergers and acquisitions, thus stimulating the investment markets and strengthening the Nigerian capital markets.

Investment advisors and analysts at Lead Capital Plc, Cardinal Stone Partners and Sterling Capital Markets among others agreed that the emergence of Lafarge Africa could directly and indirectly boost the Nigerian stock market through increased liquidity and returns on the Lafarge Africa stock and general inducement of mergers and acquisitions.
*Peter Egwuatu – Vanguard

In this article

Join the Conversation