The Board of Directors of Cement Company of Northern Nigeria (“CCNN”), owners of the 500,000 metric tonnes per annum Sokoto Cement Plant, announces that it has informed the Nigerian Stock Exchange of its proposed merger with the BUA Cement-owned Kalambaina Cement Company Ltd.
Kalambaina Cement owns the newly built 1.5million tonnes per annum Kalambaina Cement plant in Sokoto State.
This disclosure was made known in filings to regulatory authorities and is subject to various approvals. If approved, the combined entity will have a total installed capacity of2million metric tonnes per annum.
Disclosing the proposed merger, Managing Director of CCNN, Ibrahim Aminu, said the merger will position CCNN for better competitiveness within its home market.
He said the merger will also enable the company to utilise the more modern plant and equipment of the Kalambaina Cement Company Ltd to boost its market penetration and export potential.
“Over the years, we have always delivered exceptional value to all stakeholders and this proposed merger is in continuation of that. We have consistently outperformed the industry in key metrics such as capacity utilization but growth has been hampered over the years due to limited expansion and lack of alternative fuel sources.
“Kalambaina Cement’s 1.5million metric tonnes per annum multi-fuel (coal, heavy oils and gas) powered cement plant solves that issue with limited downtime and further opportunities for growth and expansion.”
According to the statement, CCNN further alluded 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 enlarged company, economies of scale, enhanced operations and administrative efficiencies which are expected to accrue.
“This is in view of various challenges that had prevented CCNN from maximizing the opportunities present in its local markets where it is hampered by limited access and high cost of heavy fuels which CCNN’s Sokoto Cement factory operates on,” the company said.
It was also disclosed that the shares of CCNN will be issued and allotted to all shareholders of Kalambaina Cement in exchange for their shares in Kalambaina Cement at an agreed ratio based on CCNN’s 30-day volume weighted average closing price to 22 June 2018 of ₦25.99 per share.
The statement said this move is also expected to put BUA Cement businesses in a stronger position to compete effectively and also explore export opportunities in neighbouring countries.