Local banks back Lafarge takeover…SA’s ABSA, Decker & Hofmeyer key advisors

FOSSIL Mines Private Limited, lined up a string of local lenders and pension funds to back its takeover of Zimbabwe’s second largest cement maker, Lafarge Cement, insiders said Friday.

Lafarge announced the deal through a Zimbabwe Stock Exchange (ZSE) filing Monday, saying Fossil would take over 76,5% shareholding in the business.

Did not disclose the amounts involved.

Fossil will take over Swiss based Associated International Cement Limited (AICL)’s shareholding in the business, after beating bids from firms including Chinese outfit, Huaxin, which had until now been seen as the favourite after executing similar deals in neighbouring Zambia and Malawi.

AICL, a member of Swiss based cement giant, Holcim Group, has been divesting in several markets.

“Fossil’s offer is backed by local banks, pension funds and wealth managers,” a source told Standardbusiness without disclosing the value of the deal.

“Fossil engaged local financial advisors, and commercial attorneys to act on its behalf on the bid as well as Cliff, Decker and Hofmeyer of South Africa to act as transaction advisory team,” added the source.

Should the deal sail through, Fossil wants to maintain Lafarge’s listing on the ZSE.

A plan to recapitalise the business has also been laid out, the sources said, noting that the new shareholders has tabled a plan to scale up cement output.

Fossil, which has been at the forefront of major infrastructure rehabilitation projects in Zimbabwe, will be strategically positioned to control the construction value chain from cement making to construction.

This is in addition to mining, which also requires cement.

The sources said Fossil negotiated various structures with its lenders and pension funds, giving it a competitive advantage over rival bidders.

Bids were made through Lafarge’s financial advisors ABSA Corporate and Investment Banking in South Africa.

The disposal of Holcim’s Zimbabwean shareholding follows prior disposals of Holcim shareholding in Northern Ireland, Zambia and Malawi.

The Holcim Group is also in the process of disposing its Indian cement business.

It announced on 25 January 2022 that it would dispose of their 76,45% shareholding in Lafarge Cement Zimbabwe as part of their strategy to divest from the cement manufacturing business.

Holcim then invited interested bidders to submit their expressions of interest to its financial advisors, ABSA Corporate and Investment Banking in South Africa.

After evaluation of the expressions of interest on 1 March 2022 Holcim then invited suitable investors to submit binding offers of interest for the acquisition.

Fossil was among five invited businesses for the acquisition via an auction system.

As part of evaluating the bids, Holcim invited bidders to South Africa for negotiations.

“The final round of negotiations between Holcim and Fossil took place in South Africa from 28 May 2022 to 30 May 2022 wherein Fossil’s offer to acquire 76,45% of Lafarge Zimbabwe was accepted pending further due diligence of the asset and regulatory approvals,” the source added.

Currently, about 40% of Zimbabwe’s cement requirements are imported, an opportunity that Fossil wants to capitalise on by providing the market with readily available cement.

The company was last Monday named in a ZSE cautionary statement as the investor that is now locked in exclusive negotiations with Lafarge Zimbabwe.

“Further to the cautionary announcement dated 31 May 2022, shareholders and members of the investing public are advised that Associated International Cement Limited, a member of the Holcim group, has entered into a binding agreement for the sale of its 76,45% stake in Lafarge Cement Zimbabwe Limited to Fossil Mines (Private) Limited.

“The transaction, if successfully concluded, may have a material effect on the company’s securities. Accordingly, shareholders and members of the investing public are advised to exercise caution when dealing in the company’s securities until a full announcement is made,” the notice said.

“The company was now named because they have signed some MOUs which I am not very privy to, but I know for a fact that the signing of the agreements amounts to completion of one of three critical stages in the deal,” said a highly placed source.

“At the next stage, it’s expected that Fossil will possibly start part payment and effectively seal the deal because at this stage it’s just like they are talking exclusively, but they can at any given time decide to pull out, it’s not the deal is sealed and done yet,” the source added.

Responding to Standardbusiness, Fossil said: “We have a non-disclosure agreement, the share information shall come”.-newsday