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UPDATE 1-Canada's Fairfax offers $154 mln for 22 pct of South Africa's PPC

Published 2017-09-04, 10:21 a/m
© Reuters.  UPDATE 1-Canada's Fairfax offers $154 mln for 22 pct of South Africa's PPC
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JOHANNESBURG, Sept 4 (Reuters) - Canada's Fairfax Africa Holdings < FAHu.TO has offered to buy 22 percent of South African cement maker PPC Ltd PPCJ.J for 2 billion rand ($154 million), a cash injection aimed at strong-arming the debt-laden company into a tie-up with its nearest unlisted rival AfriSam. AFRSMV.UL

In August, PPC said Afrisam intends to make a new proposal on a merger of the two South African cement makers after AfriSam terminated its current plan. through its regional unit, said the offer to buy into PPC, at 5.75 rand per share, was subject to the PPC board recommending it as fair and reasonable and its shareholders voting in favour of AfriSam's bid, PPC said on Monday

The Fairfax offer is also subject to the completion of an all-share merger between Afrisam and PPC that values PPC at about 9.2 billion rand, or 5.75 rand per share, and AfriSam at an enterprise value of 7.5 billion rand.

But PPC independent board, created to assess the Afrisam merger, was of the view that the proposal "fundamentally undervalues PPC".

PPC also said it had received other offers from trade bidders, one of whom included a potential cash component, to create a pan-African cement giant. It did not name the bidders, saying the talks are confidential.

It added that the proposals were "credible and potentially value-enhancing for shareholders to merit careful consideration."

With around 5 billion rand in net debt and about 1 billion rand in cash, PPC did not declare a dividend in the year to end of March, saying it needed the money to pay down borrowings jacked up by years of expansion elsewhere on the continent.

The merger, if it happens, would create a group with more financial muscle that would be able to compete globally, with assets across six African countries.

AfriSam, which is majority owned by the Public Investment Corporation pension fund, first proposed a merger in 2014 when PPC's share price had been under pressure due to infighting between its board and former chief executive. ($1 = 12.9520 rand)

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