AfriSam Group and PPC begin merger talks

Afrisam

PPC has told its shareholders that its Board of Directors and the Board of Directors of AfriSam Group Proprietary
Limited are considering a merger deal.

PPC said in a SENS agreement that discussions have started to assess the merits of a potential merger between the two companies.

PPC said the two parties have “independently concluded that current market circumstances, warrant entering into formal discussions to consider”.

As part of such discussions, the Parties will jointly assess the value that they believe can be realised for the shareholders of PPC and AfriSam if the Proposed Merger is implemented, which the respective Boards of Directors believe may arise from the following:

i) The creation of a South African-owned cement producer that is financially stronger, operationally more efficient and has deeper technical capability;
ii) The merged entity being able, by virtue of such enhanced
capabilities, to invest in future growth opportunities;
iii) The merged entity being significantly empowered, given that
Phembani Group Proprietary Limited (a major shareholder in
AfriSam) and other empowered investors (including PPC’s
existing broad-based black economic empowerment (“B-BBEE”)
shareholders) will own a significant share of the merged
entity. This will be in addition to PPC’s announced
intention to implement a further B-BBEE ownership
transaction (“PPC’s Proposed B-BBEE Transaction”);
iv) Globally the cement market is dominated by multinational and
regional players. The merged entity will be well placed and
have the balance sheet capabilities to develop as a major
African cement producer, given its complementary production
assets in six African countries outside of South Africa;
v) Synergies which might arise from a combination of the
parties’ operations.

As part of the assessment of the Proposed Merger, and as a condition
to agreeing to pursue the Proposed Merger, the following will be
required:
i) The Parties being satisfied that, after closing of the
Proposed Merger, the merged entity will have similar levels
of gearing to PPC with sufficient financial liquidity;
ii) Agreement by the Parties on the merger ratio;
iii) The Parties confirming their preliminary view described
above that the merged entity will be significantly
empowered, including being satisfied with the potential
impact of the Proposed Merger on PPC’s Proposed B-BBEE
Transaction;
iv) Agreement between the Parties in respect of any potential
competition law considerations associated with the Proposed
Merger; and
v) Each Party separately conducting, and being satisfied with
the results of, a due diligence concerning the business,
assets and liabilities of the other; and
vi) Ultimately, agreement that the Proposed Merger is likely to
deliver compelling benefits for all stakeholders.