Tanga, Twiga cement merge deal hangs on thread

ACQUISITION of 68.33 per cent of Tanga Cement by Twiga Cement’s parent firm hangs in balance after Fair Competition Tribunal (FCT) halted the transaction until an appeal is heard.

The transaction was put through by Tanzania Fair Competition Commission (FCC) under ‘conditional approval’ in April but last month FCT reversed the decision until an appeal lodged by Chalinze Cement Limited and Tanzania Consumer

Advocacy Society is heard.

Tanga Cement yesterday issued a cautionary statement saying the FCT held that the conditional approval granted by the FCC was “declared void”.

“This informal ruling of the FCT means that the acquisition cannot proceed until the requisite outstanding approval is obtained.

“The HeidelbergCement and AfriSam (Twiga’s parent firm) are considering how to proceed, but the FCT ruling has placed the acquisition at great risk of not being implemented,” Tanga, a listed firm and trades as Simba cement, said in the statement.

Following the FCT decision, Tanga Cement extended the acquisition date for the third time to next January.

The Scancem International DA, a subsidiary of HeidelbergCement, offered to acquire 43,504,403 ordinary shares in Tanga Cement from AfriSam, which shares constitute 68.33per cent.

Alpha Capital Head of Research and Financial Analytics Imani Muhingo told Daily News yesterday that it seems the acquisition received significant resistance meaning the deal may not go through.

“Tanga Cement may then need to resume debt service from the current standstill agreement with their creditor,” Mr Muhingo said:

“The price may fall or get stuck at the current level due to a lack of buyers. I also expect a profit warning due to power shortage reports since the beginning of July that prompted a substantial decline in production.”

The Simba cement, according to analysts, continued to be a speculative stock at this point.

The Board of Directors of Tanga Cement said the Sales and Purchase Agreement (SPA) addendum put the enterprise value to an aggregate amount of 155 million US dollars for Tanga Cement. This translates to an indicative price of 2,265/- per share.

Shares of Tanga cement at Dar es Salaam Stock Exchange traded at 1,400/- at the closing of market in Wednesday.