How Fossil won the Larfage transaction
FOSSIL Mines’ offer to acquire 76,45% shareholding in cement maker, Lafarge Cement Zimbabwe will be supported by local banks, pension funds and wealth managers as the mining firm moves to consolidate its performance in the sector.
Lafarge Cement Zimbabwe’s stake owned by Associated International Cement Limited (AICL) — a member of the multinational conglomerate and Swiss-based Holcim Group — will now be owned by Fossil which already has several mining ventures across Zimbabwe. Fossil Mines is a subsidiary of Fossil Group — a company with interests in construction, road works and agriculture.
The Lafarge deal is expected to run into tens of millions of United States dollars. However, officials remained mum on the figures involved in the transaction, saying more details would be released soon.
“Fossil’s offer is backed by support from local banks, pension funds and wealth managers. Fossil engaged local financial advisors, and commercial attorneys to act on its behalf on the bid as well as Cliff, Decker and Hofmeyer of South Africa to act as its transaction advisory team,” Fossil told the Independent. But the disposal of Holcim’s Zimbabwean shareholding follows prior divesting of the cement giant’s shareholding in the Northern Ireland, Zambian and Malawian markets.
The Zimbabwe Independent also understands that the Holcim Group is in the process of disposing of its Indian cement business.
Details obtained this week regarding the Lafarge transaction show that cement conglomerate Holcim Group first announced on January 25, 2022 an intention to dispose of 76,45% shareholding in Lafarge Cement Zimbabwe. This is part of Holcim’s strategy to divest from the cement manufacturing business as has so far been done in Ghana and Brazil in a transaction reported to have raked in about US$1 billion.
After the January announcement, Holcim then invited interested bidders to submit expressions of interest (EOI) to its financial advisors, Absa Corporate and Investment Banking in South Africa. Absa is one of the biggest financial services groups in South Africa and in other 11 African countries with a total asset portfolio of a jaw-dropping R1,4 trillion and a staggering 60 000 workers.
However, following the evaluation of expressions of interest on March 1, 2022 Holcim then invited potential suitors to submit binding offers of interest for the acquisition.
Consequently, five firms were selected including Chinese giant Huaxin and Fossil Mines, among others. The companies were chosen for the acquisition via an auction system and as part of evaluating the bids, Holcim invited the bidders to South Africa for negotiations. The Lafarge transaction negotiations between Holcim and Fossil were held in South Africa between May 28-30, 2022 wherein Fossil’s offer to acquire 76,45% of Lafarge Zimbabwe was accepted pending further due diligence of the asset (Lafarge) and regulatory approvals.
Fossil said: “Should Fossil takeover Lafarge, the planned strategy is to maintain the company as a listed business and also recapitalise the cement maker, leading to an increase in the cement output from the plant. Currently, 40% of Zimbabwe’s cement requirements are imported, an opportunity that Fossil wants to capitalise on by providing the market with readily available cement.”
Lafarge Cement Zimbabwe acting company secretary Arnold Chikazhe, in a cautionary statement this week, said Holcim has entered into an agreement with Fossil Mines for the acquisition of the 76,45% stake.
“The transaction, if successfully concluded, may have a material effect on the company’s securities. Accordingly, shareholders and members of the investing public are advised to exercise caution when dealing in the company’s securities until a full announcement is made,” Chikazhe said.
Lafarge, which employs over 800 people, has a 60-year-old presence in Zimbabwe and is well known for making cement, aggregates and dry mortar. The company experienced a major setback on October 11, 2021 after a mill plant roof collapsed, affecting operations between October 2021 and mid-February 2022.
But Fossil has committed to increasing output to ensure cement availability on the market.