Holcim signs agreement to sell its majority stake in Holcim South Africa
Since political transformation in 1994, the government of South Africa has introduced legislation and supported industry self-regulation aimed at ensuring an equivalent economic transformation, termed Black Economic Empowerment ("BEE"). As a result, Holcim has signed a conditional agreement to sell 85 per cent of its stake in Holcim South Africa to a BEE Consortium based on an enterprise value of ZAR 15.5 billion. Holcim would maintain a 15 Per cent share in the newly founded AfriSam, which would hold a 54 per cent stake in Holcim South Africa. Holcim would continue to provide technical assistance.
AfriSam Consortium is a broad-based BEE company established specifically for the proposed transaction. Its shareholders will include all employees of Holcim South Africa as well as a number of charities and broad-based groups, and will be led by new entrant BEE group Bunker Hills Investments. Completion of the transaction is subject to inter alia regulatory approvals and the completion of AfriSam Consortium’s financing process. Holcim expects to be able to conclude the transaction in 2007, at which time the South African Groupcompany would be deconsolidated from Holcim. Until that time Holcim will continue to have control of Holcim South Africa.
For 2005, Holcim South Africa reported an operating profit of approximately CHF 240 million on sales of CHF 835 million, with a workforce of some 2000. The company owns two cement plants and a grinding station in South Africa and has a 62.5 percent interest inTanzania-based and listed Tanga Cement Company. The total annual cement capacity is 4.1Mt. Holcim South Africa is also involved in the aggregates and ready-mix concrete businesses.
With the proposed transaction, Holcim would not only ensure sustainable BEE for Holcim South Africa, but also create an excellent platform for further growth of this company. Holcim firmly believes that this is in the best interest of the shareholders of Holcim and of Holcim South Africa.
Published under Cement News
