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

Holcim AG will sell its 83.8 percent stake in Lafarge Africa to a Chinese cement maker, Huaxin Cement Co., in a deal that values Lafarge Africa at $1 billion.

According to a media release by the group on Sunday, the deal is to be finalised in 2025, subject to regulatory approval.

With a market capitalisation of N934 billion (around $556 million), the deal will see Lafarge’s valuation almost double on the NGX if the new owners do not move to delist Lafarge from the NGX. The move by Holcim follows a trend of divestments which the company has adopted.

In 2021, Holcim divested away from its Zambian operations by selling Lafarge Zambia to the same Chinese company, Huaxin Cement Co. The company owned a 75 percent stake in Lafarge Zambia, However, the shareholding was sold in a deal that valued Lafarge Zambia, now Chilanga Cement, at $100 million.

Also in 2021, Lafarge divested from its operations in the Indian Ocean area, namely Holcim Madagascar, Holcim Reunion, Lafarge Comoros, Lafarge Mayotte, and Lafarge Seychelles.

Lafarge’s sale to Huaxin will mark the debut of the Chinese in Nigeria’s burgeoning cement industry. Huaxin Cement, which was founded in 1907, is one of the top 10 cement manufacturers in China. The company is listed on the Shanghai Stock Exchange, and it boasts a market capitalisation of around $2.18 billion. In the nine months ending September 30, 2024, Huaxin posted a revenue of 24.7 billion Chinese Yuan, around $3.4 billion. However, the company posted a net income of 1.14 billion Chinese Yuan ($157 million).

During the same period, Lafarge Africa posted a revenue of N479.5 billion (~$320 million), while the company posted a net income of N60.1 billion (~$40.1 million). In terms of profit margin, Lafarge boasts a significantly higher profitability margin which makes it an attractive acquisition for Huaxin as it seeks to bolster its overall profit margins.

The divestment of Holcim away from Nigeria continues a trend of foreign exits from Nigeria, especially by European and American corporates.