On the ‘Mandatory Tender Offer’ to minorities in AshakaCem

… “It is not a ‘buy-out’ offer, says Lafarge Africa

Amid the ongoing Mandatory Tender Offer (MTO) transaction by Lafarge Africa plc to minority shareholders of Ashaka Cement plc, Lafarge strongly believes the offer is not a ‘buy-out’ of minority shareholders of Ashaka.

The management of Lafarge Africa plc recently got regulatory consent to conduct a Mandatory Tender Offer to minority shareholders of AshakaCem for 927 million shares as approved by the board, representing 41.39 percent of the company equity stake.

“This offer is to exchange their (minorities) shares for the shares in Ashaka Cement for the shares of Lafarge Africa plc, and on top of that, receive an additional cash payment of N2 per share tendered,” a team of Lafarge Africa plc representatives led by Albert Sigei, vice president, strategy and business development, told INVESTOR.

It was further learnt that accepting the offer will mean that they (minority shareholders in AshakaCem) will be joining a stronger platform with interests in Nigeria (Ashaka, Wapco, UniCem, Atlas & Ready Mix) and South Africa.

Their response followed recent concerns raised by some market analysts. INVESTOR also learnt that Lafarge Africa plc has commenced the process of engagement with retail and institutional shareholders of Ashaka Cement plc, and “they are very positive about the offer, hence we remain upbeat on the success of the offer”.
The MTO values each Ashaka share at around N24 per share (cash consideration of N2 inclusive), according to market analysts.

“The minorities of AshakaCem have been offered the same share exchange parity – that is 57 shares of Lafarge Africa plc for 202 shares of AshakaCem plus an additional cash consideration of N2 for every AshakaCem share tendered, being an upgrade to earlier terms offered by Lafarge Africa plc to Lafarge Group,” Sigei said.
The offer which opened Wednesday December 10, 2014 closes Friday January 16, 2015.

In a letter to this effect date December 5, 2014 and addressed to Oscar Onyema, chief executive officer, NSE, qualifying shareholders of AshakaCem who accept the offer will receive 57 ordinary shares in Lafarge Africa for every 202 ordinary shares in Ashaka Cement so tendered.

“It is important to note that the consideration offered to the Lafarge Group when Lafarge Africa acquired its 58.61 percent equity stake in Ashaka in June 2014 was 57 shares of Lafarge Africa for 202 shares of Ashaka.

“This parity represents a 22 percent premium above AshakaCem’s closing on the date the transaction was announced and a 66 percent premium to the volume weighted average price of the company’s shares for the three months prior to this announcement,” the team of Lafarge Africa plc representatives further told INVESTOR.

“As you will recall, the parity of 57:202 was arrived at by Lafarge Africa after a rigorous process, involving several valuation methods, including independent valuations by Standard Chartered Bank and a fairness opinion from KPMG.

“The board of directors of AshakaCem, under financial advice from Stanbic IBTC and Capital Assets, gave a unanimous recommendation to the offer while confirming that it is fair. The professionals engaged on the valuation used internationally accepted method, including consideration of evolution of the stock price. It must be emphasised that a ‘spot price’ is not the only way to determine the value of a company for such a transaction,” the team from Lafarge Africa further stated.

The MTO transaction resulted after Lafarge Africa plc notified the Nigerian Stock Exchange of the completion of block trade in respect of the 58.61 percent shareholding in AshakaCem plc, held by Lafarge Nigeria (UK) Limited to Lafarge Africa plc.

The block trade triggered an Mandatory Tender Offer in accordance with Section 131 of the Investments & Securities Act (No 29 of 2007) and Rule 445 of the Securities & Exchange Commission (SEC) rules and regulations, which requires that a MTO be made to all other shareholders of a public company by any party that acquires 30 percent or more of the shares in that company.

Ashaka Cement is one of the businesses involved in the Lafarge Africa merger –the consolidation of Lafarge’s Nigerian and South African business entities.

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

Under that transaction, Lafarge Group transferred its direct and indirect shareholdings in Lafarge South Africa Holding Limited of 72.4 percent and its equity stakes in three other cement companies in Nigeria-United Cement Company of Nigeria Limited, 35 percent, Ashaka Cement plc, 58.61 percent and Atlas Cement Company Limited, 100 percent to Lafarge Wapco for a cash consideration of $200m and the issuance of some 1.4bn Lafarge Africa shares to the Lafarge Group.