Lafarge hits 52-week high as Huaxin deal drives buyers

…Meristem sees stock hitting N100 per share

…Equities market records first negative close in Dec

As the Lafarge Africa Plc shares continue to drive rally at the Nigerian Exchange Limited (NGX), the acquisition Value Per Share (VPS) is anticipated to reach a high of N100, according to Lagos-based Meristem research analysts.

As buy-side activities on the Bourse continue to favour the cement maker, Lafarge furthered its rally on Tuesday December 3, reaching N70.15 (its 52-week high) after adding N6.35 or 9.95 percent at the close of trading.

Swiss building materials company Holcim Group is set to sell its controlling stake in Lafarge Africa Plc to Chinese corporation Huaxin Cement Company Limited in deal valued a $1billion. Huaxin Cement is expected to pay $838.1 million to acquire the 83.81 percent stake owned by Holcim.

“The acquisition of 83.81 percent (13.50billion shares) stake in Larfage by Huaxin Cement, at $83813million, translates to a Value Per Share (VPS) of $0.06 or N102.44 (at an assumed conversion rate of N1,650/$), highlighting a 60.56 percent premium over Lafarge’s closing price of N63.80 on December 2, 2024,” according to Meristem research analysts in their recent note.

The analysts further noted that with a launch of Mandatory Takeover Offer (MTO) to minority shareholders after the completion of the acquisition by Huaxin, their projected Value Per Share provides existing investors in Lafarge an opportunity to exit their holdings at a substantial premium.

“Applying this VPS to the company’s total outstanding shares of 16.11billion, the implied market capitalisation stands at N1.65trillion, substantially exceeding the current market

capitalisation of N1.03 trillion.

“This premium signals Huaxin Cement’s confidence in Lafarge’s intrinsic value and its potential as a strategic asset in the Nigerian and African market”. The deal is anticipated to close in 2025, subject to regulatory approvals

The transaction is subject to regulatory approvals and is expected to close in 2025. Post-completion, Lafarge Africa Plc will remain listed on the Nigerian Exchange Limited (NGX).

Additionally, Huaxin Cement intends to launch a mandatory takeover offer, in compliance

with applicable laws and regulations, to provide other shareholders the opportunity to sell

their shares.

Huaxin Cement is buying the shares through its subsidiaries, Hainan Huaxin Pan-Africa Investment Co. Limited and Huaxin (Hong Kong) International Holdings Limited.

Holcim currently holds its shares in Lafarge through two subsidiaries: Caricement B.V. and Associated International Cement Limited (AICL), which own 56.04 percent and 27.77 percent, respectively.

Read also: Holcim to sell off stake in Lafarge Africa in $1 billion deal

Combined, the group owns an 83.81percent stake, which it plans to sell to Huaxin Cement Company Limited.

In their view, Meristem research analysts said “this could enhance Lafarge operational efficiency, drive investments in capacity expansion, improve profitability, and potentially spur buying interest”.

Additionally, they noted that this acquisition could open opportunities for Lafarge to expand its market share in Nigeria and other African markets, leveraging Huaxin’s resources and experience.

“However, the mandatory takeover offer may also prompt some investors to sell and realise gains, depending on market sentiment and the offer’s terms,” Meristem analysts further noted.

Stock market dips by 0.03%

Nigeria’s equities market recorded its first negative close (-0.03 percent or N19billion) in this new month of December. No thanks to stocks of newly listed Aradel which decreased most, from N517 to N471.90, adding N45.10 or 8.72 percent. The market’s performance indicators – Nigerian Exchange Limited (NGX) All-Share Index (ASI) and equities market capitalisation decreased from preceding trading day’s highs of 97,733.86 points and N59.245 trillion to 97,702.56 points and N59.226trillion. In 9,403 deals, investors exchanged 1,156,171,946 shares worth N27.363billion. FBN Holdings, Axa Mansard, UBA, Access Holdings, and Ellah Lakes were actively traded stocks on Tuesday.