- The Chinese firm acquiring Holcim’s stake in Lafarge Africa has valued the 100% stake of the firm at $1.6 billion
- The company will reportedly pay %838.8 million to acquire Holcim’s share in the company
- If finalised, Lafarge Africa will emerge as one of the most valuable companies on the Nigerian Exchange Limited, with a market cap of N1.87 trillion
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
Huaxin Cement Company, the Chinese firm and prospective buyer of Holcim’s 83% stake in Lafarge Africa, has reportedly valued 100% of the company’s shareholding at $1.6 billion.
The group is set to spend $838.8 million to acquire Holcim’s stake in Lafarge Africa. It also estimated the enterprise value of Lafarge Africa to be between $1.06 billion and $1.59 billion.
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The valuation places new cement price in Nigeria
The valuation was disclosed in the firm’s filing on the Hong Kong Exchange.
According to reports, the valuation assumes cement prices in Nigeria to range from between $100 and $150 per tonne, based on Lafarge’s annual production capacity of 10.6 million tonnes.
Also, the firm estimated the replacement value of Lafarge Africa’s assets to be $1.2 billion to $1.4 billion, with an enterprise value of $1.057 billion.
The Chinese firm used an alternative valuation approach by multiplying Lafarge Africa’s 2023 EBITDA of $151 million by a factor of seven, resulting in an enterprise value of $1.057 billion.
Lafarge Africa stated that the acquisition aligns with Huaxin’s overseas expansion plan, focusing on leveraging its expertise in industrial technology and production chain integration to drive growth.
Chinese firm to introduce new technology
The plan also allows the company to counter the effects of China’s domestic market shutdown.
The Chinese firm’s entry into Nigeria’s cement industry will mark a significant shift.
Indian cement firms have primarily dominated the sector before the arrival of Dangote Cement, Africa’s largest manufacturer.
Lafarge Africa’s share price rises
Huaxin’s entry into the Nigerian cement industry will mark the beginning of the introduction of new technologies, production methods, and pricing models.
If finalised in August next year, with the exchange rate at N1,700 per dollar, Lafarge Africa’s market cap would be about N1.87 trillion.
Since the deal was announced on December 1, 2024, the cement company’s share price has skyrocketed by 21%, hitting a high of N70.15 as of December 3, 2024.
Experts say the new deal will cause cement prices to crash in Nigeria, as the new company will have a different pricing model and new technology.
Cement prices in Nigeria have soared recently, with brands selling for as much as N8,000 per 50kg and N7,500.
Dangote, BUA, and Lafarge cement firms earn N3.6trn in sales
Legit.ng earlier reported that three of Nigeria’s biggest Cement manufacturers, Dangote, BUA and Lafarge Africa, earned a combined revenue of N3.632 trillion in the third quarter of 2024.
The revenue represents a 6.3% increase from N2.140 trillion earned by the firms in the same period last year.
The firms’ new sales volume comes amid economic challenges that disrupted Nigeria’s business environment, including the forex crisis and rising energy costs.
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Source: Legit.ng
