- Kalahari Cement has signed a share purchase agreement (SPA) to acquire an additional 27% equity stake in East African Portland Cement (EAPC), one of Kenya’s main players in the cement production business.
- The deal valued at $12.3 million will see the Amsons Group subsidiary purchase additional 24,300,000 ordinary shares from the National Security Fund (NSSF), turning into a majority shareholder.
- However, the Amsons Group subsidiary noted that it has no plans of a full takeover push for the Athi River-based company.
The push by Tanzania-based conglomerate Amsons Group to secure a firm control in the regions cement business has intensified with Kalahari Cement raising the stake in Kenya-based East Africa Portland Cement (EAPC) to 56.2 percent. This follows the conclusion of a new stake acquisition of 24,300,000 ordinary shares for $12.3 million (KES1.6 billion) by Kalahari Cement from the National Security Fund (NSSF).
In an update to the markets on Wednesday, Kalahari Cement, which was registered in Kenya in May, said it has signed a share purchase agreement (SPA) to acquire an additional 27 percent equity stake in EAPC, one of Kenya’s main players in the cement production business.
Kalahari Cement confirmed that it had entered into the SPA with NSSF on Tuesday this week, in yet another strategic investment bid that will see the firm acquire 24,300,000 ordinary shares at KES 66 per share in the issued share capital of EAPC from NSSF, subject to regulatory approvals.
Although the proposed transaction will see the new entrant, Kalahari Cement, assume a controlling stake in troubled EAPC, the Amsons Group subsidiary noted that it has no plans of a full takeover push for the Athi River based company.
Kalahari Cement’s growing stake in EAPC
On November 12, this year, Kalahari Cement announced its grand entry into Kenya’s cement manufacturing business with the acquisition of a 29.2 percent stake stake in EAPC from Associated International Cement Limited (AIC) and Cementia Holding AG. Bamburi Cement Plc, which was also bought off by Amsons Group late 2024, also holds roughly 12.5 percent of ordinary shares in EAPC.
According to Amsons Group Managing Director Edha Nahdi, Kalahari Cement does not have plans underway to place a general offer to acquire all the voting shares in EAPC and will apply to the Capital Markets Authority (CMA) for an exemption from the requirement to make a takeover offer to all shareholders of the cement manufacturing firm.
“Kalahari does not intend to delist EAPC from the NSE after completion of the Proposed Transaction,” Nahdi said, adding that “Kalahari, as a long-term strategic investor, is committed to assisting EAPC in achieving its strategic objectives whilst deepening the capital markets regime, which is vital for Kenya’s economic prosperity.”
The proposed transaction, Nahdi noted, is designed to build long-term value for EAPC by strengthening the firm’s infrastructure and providing access to additional resources. “As I have previously mentioned, as a long-term strategic investor, Kalahari Cement will assist EAPC to achieve its strategic objectives through a shared prosperity model with all stakeholders, from staff, trade partners and government of Kenya agencies. At Amsons Group, we do not intend to spare any resource, financial or otherwise, in our turnaround partnership with all EAPC Stakeholders.”
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The troubles in EAPC
Listed at the Nairobi Securities Exchange (NSE), EAPC has been in the headlines for all the wrong reasons including reports of fiscal instability, operational woes, questions over its governance structure and lately controversial sale to Kalahari Cement which members of parliament labelled “hostile takeover.”
The company has suffered from production challenges, with reported difficulties in accessing limestone quarries pitting locals with company management. At the board level, the company has grappled with frequent leadership wrangles which experts attribute to its reduced ability to compete effectively.
Overtime, ex-workers have taken legal action against the company, accusing the management of unfair retrenchment procedures. Lately, lawmakers have put to question EAPC’s sale to Amsons Group citing lack of transparency, public participation, and consultation with staff on the purchase.
Concerns have been raised over the steep discount offered in the sale, which some suggest might be undervalued given a recent return to profit (mostly from asset revaluation) and dividend declaration. What’s more, EAPC’s valuable land holdings have been a source of significant trouble, involving conflicts with squatters and potential land grabbing, which have sometimes turned violent.
Read also: Tanzania’s Amsons Group grows footprint in East Africa’s cement industry
