The Federal High Court Lagos Judicial Division on Thursday dismissed a motion by Lafarge Africa and Holcim Limited objecting to the court’s jurisdiction to hear a matter involving a deal for the sales of the latter’s shares in the former to Huaxin, a Chinese cement maker.
Justice A. Lewis-Allagoa, after hearing the submission of the counsel to the plaintiff (Strategic Consultancy Limited) and the legal team of Lafarge Africa and Holcim, who are co-defendants in the suit, threw out the motion.
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The Central Securities and Clearing System Plc and the Nigerian Exchange Limited are the other defendants.
Background to the face-off
Lafarge Africa announced last December that its board of directors considered communications received from Lafarge’s biggest shareholders, Caricement BV and Associated International Cement Limited (AICL), regarding a share sales deal.
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“Caricement’s sole shareholder, Holderfin B.V, part of the Holcim Group, has reached agreement with Hainan Huaxin Pan-Africa Investment Co. Limited and Huaxin (Hong Kong) International Holdings Limited, part of Huaxin Cement, pursuant to which they will acquire respectively full ownership of Caricement and a second entity, Davis Peak Holdings Limited, which will hold the shares held currently by AICL,” Lafarge Africa said in a regulatory filing at the time.
Davis Peak Holdings is an entity controlled by Holcim. Holcim also has AICL among its subsidiaries.
Once the deal is consummated, the Huaxin Cement entities will take over a combined 83.8 per cent stake in Lafarge Africa, subject to regulatory approvals. The transaction is anticipated to close in 2025.
Huaxin Cement plans to initiate a mandatory takeover bid for minority shares in the company as regulation requires, if the deal succeeds.
Strategic Consultancy Limited, a shareholder of Lafarge Africa, initiated a legal action against the defendants to halt the share sale, which it said was conducted covertly without giving itself and other minority shareholders the chance to buy the shares.
It claimed that selling the stake to a foreign firm that does not have registration in Nigeria is at odds with the provisions of the Companies & Allied Matters Act 2020, the Securities & Exchange Act, and the Nigerian Investment Promotion Act for the rights of minority shareholders.
Last month, the Senate Committee on Capital Market resolved to invite Lafarge Africa to provide clarity on the planned divestment of Holcim’s interest to Huaxin.
Abdulkafir Abbas, the director in charge of securities and investment services at the Securities and Exchange Commission (SEC), stated during the Senate session that the regulator was yet to be formally informed of the transaction, but noted that SEC is aware of an internal restructuring at the Holcim Group, which transferred 27.8 per cent shareholding of AICL to Davis Peak Holdings Limited.
“There has been no change in the ultimate beneficial ownership of the shares as a result of this transaction,” Mr Abbas said.
The director of post-transaction management at the Bureau of Public Enterprises, Satura Aisha Bello, disclosed at the time that the shares Lafarge Africa wants to offload solely belong to the company and exclude the 16.2 per cent stake owned by Nigerians in the company.
Ms Bello remarked that Lafarge Africa’s current holding of 83.8 per cent is the sum total of the shares of the three state-owned cement companies sold to the company during privatisation rounds in 2001 and 2002.
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The court ruling against Lafarge Africa
After rejecting the claim by the two defendants that the court does not have the jurisdiction to hear the case, Justice Lewis-Allagoa directed that Caricement BV and AICL be included as the fifth and sixth defendants in the suit.
He also gave the go-ahead for originating summons to be issued and served on the new defendants out of jurisdiction. The matter was further adjourned to 11 June.
