A consortium headed by Fairfax has put in a new bid for African cement producer PPC, after AfriSam terminated its current plan saying it would come up with a new offer.
The consortium has made a partial offer to acquire R2 billion worth of shares at R5.75 apiece. One of the conditions for the offer becoming effective is that shareholders of PPC approve a proposal to give effect to a merger between PPC and AfriSam.
In a stock exchange news service statement the cement producer says “the independent board has not yet had an opportunity to fully consider the partial offer or the opinion of the independent expert. However, based on the prior extensive engagement in respect of a possible merger with AfriSam, and the independent board’s own views regarding the underlying value of PPC, it notes, as a preliminary observation, that the offer price of R5.75 per ordinary share fundamentally undervalues PPC and, when considered in conjunction with the proposed exchange ratio, does not constitute sufficient compensation for PPC’s shareholders. This is particularly so given the partial nature of the offer and the effective control that would vest in the Fairfax Consortium”.
PPC has also received two other proposals from trade bidders, each in relation to a potential pan-African combination (one of which also includes a potential cash component). The company says the independent board is of the view that each of these proposals is sufficiently credible and potentially value enhancing to shareholders to merit careful consideration and further engagement with the respective bidders.