In its bid to rip the benefit of synergy in Nigeria’s very competitive cement industry, the board of Cement Company of Northern Nigeria (CCNN), makers of Sokoto Cement, on Wednesday announced plans to merge with Kalambaina Cement Limited, a wholly owned private limited liability company of parent company- BUA Group.
The merger, which is subject to the approval of shareholders and the regulators, will see present shareholders of CCNN receiving 19,811,372 new ordinary shares of the company for every 100,000 units of Kalambaina.
According to the statement by Ahmed Aliyu, CCNN’s company secretary and legal adviser, Kalambaina has key cement assets including the 1.5m metric tonnes of cement production plant located in Kalambaina, Sokoto State
The allotment is an agreed ratio based on CCNN’s 30-day volume weighted average closing price (VWAP) to June 22, 2018 of N25.99 per share.
While creating value for all key stakeholders of both companies, the board say the move would “strength the competitive position of the enlarged company among cement manufacturers in Nigeria.”
The statement assured that “the proposed merger provides a compelling opportunity to capture significant synergies and create value for the benefit of the shareholders of both companies in the form of stronger competitive position of the enlarge company, economies of scale, enhanced operations and administrative efficiencies which are expected to accrue from the proposed merger.”
Should the approval of the Securities & Exchange Commission (SEC) and Nigerian Stock Exchange (NSE) be received, the various parties are to take further steps to consummate the proposed combination, including organizing separate court-ordered meetings.