Savannah Clinker seeks to amass 100% of the Nairobi Securities Trade-issued shares of Bamburi Cement for $197.3M (KES25.4Bn), a proposal that’s larger than the $180M (KES23Bn) positioned earlier by Amsons Group.
The competitors between Savannah Clinker and Amsons Group underscores an ever-persistent rivalry between Kenyan and Tanzanian companies within the East African market.
In July, Amsons’ $180M provide was seen as a strategic transfer to develop its footprint in Kenya and faucet into the profitable building market.
The push by Tanzania-based conglomerate Amsons Group to develop its footprint throughout Kenya via the acquisition of Bamburi Cement has taken a contemporary twist after a Kenyan-based mining agency Savannah Clinker Ltd positioned a extra engaging counter-offer for the complete acquisition of Bamburi PLC.
Within the newest submitting with market regulators, Savannah Clinker seeks to amass 100 per cent of the Nairobi Securities Trade-issued shares of Bamburi Cement for $197.3 million(KES25.4 billion), a proposal that’s larger than the $180 million or KES23 billion positioned in July 2024 by Amsons Group.
Savannah Clinker’s provide not solely surpasses the preliminary bid by cement producer Amsons Group, but additionally highlights the strategic significance of Bamburi Cement as a key participant within the area’s building sector in addition to business.
“I’m happy to current this competing provide, which represents a patriotic dedication to safe Kenyan manufacturing pursuits, now that a chance to exit a serious multinational participant is on the desk,” stated Savannah Clinker Govt Chairman and Director Benson Ndeta in an announcement.
He added, “I’ve been concerned within the native [Kenyan] enterprise and building industrial sector for the final 20 years. I’ve served as a former non-executive chairperson on the East African Portland Cement and a former majority shareholder at Savannah Cement till November 2022. I’m subsequently dedicated to investing within the development of Bamburi Cement via this acquisition bid and a fair bigger capital expenditure outlay to speed up modernization and working effectivity programmes.”
Rivalry between Kenyan and Tanzanian companies
The competitors between Savannah Clinker and Amsons Group underscores an ever-persistent rivalry between Kenyan and Tanzanian companies within the East African market. Bamburi Cement, one of many largest cement producers within the area, is a helpful asset for any firm trying to solidify its place within the mining, constructing, and building business.
Amsons Group, a Tanzanian conglomerate with numerous pursuits, had initially gave the impression to be the frontrunner within the race to amass Bamburi PLC, which exited Uganda market late final 12 months. Their $180 million provide was seen as a strategic transfer to develop their footprint in Kenya and faucet into the profitable building market. Nonetheless, Savannah Clinker’s counter-offer not solely challenges Amsons’ place but additionally introduces a nationalist component to the bidding battle, with Ndeta framing his bid as a transfer to maintain Bamburi Cement firmly below the management of Kenyan fingers.
Monetary and strategic implications
Savannah Clinker’s provide of $0.54 (KES70) per share represents a 53.34 p.c premium over the share value as of July 9, 2024, and a 64.55 p.c premium over the 30-day volume-weighted common value (VWAP), the Kenyan firm defined in a market replace. This premium is a transparent pointer to Ndeta’s dedication to securing Bamburi Cement and is more likely to attraction to shareholders looking for speedy returns.
Along with the monetary incentives, Savannah Clinker’s bid affords a number of strategic benefits. By buying Bamburi Cement, Savannah Clinker would acquire management of a serious participant within the East African cement market, with appreciable manufacturing capability, a well-established model and market share, too. Topic to regulatory approvals, the acquisition would additionally permit Savannah Clinker to develop its operations and improve its market share, positioning it as a dominant drive within the regional building business.
Furthermore, Savannah Clinker’s dedication to retaining as much as 40 p.c of Bamburi’s shares as free float on the Nairobi Securities Trade (NSE) displays a want to take care of transparency and proceed participating with institutional and native traders. This method contrasts with Amsons Group’s provide, which has been criticized for probably resulting in the delisting of Bamburi from the Nairobi bourse.
Regulatory and market reactions
The Capital Markets Authority (CMA) and different regulatory our bodies will play a vital function within the end result of this bidding battle. Each Savannah Clinker and Amsons Group might want to navigate a fancy regulatory area to safe approval for his or her respective affords.
Savannah Clinker’s dedication to finishing the transaction by February 28, 2025, gives a further benefit over Amsons Group, which has set an extended timeline with a protracted cease date of November 28, 2025. This accelerated timeline might show engaging to shareholders desirous to money in on their investments sooner slightly than later.
Market reactions to Savannah Clinker’s counter-offer have been largely constructive, with analysts noting the strategic significance of protecting Bamburi Cement below Kenyan possession. The provide has additionally sparked renewed curiosity in Bamburi’s shares, with costs anticipated to rise because the bidding battle intensifies.
Learn additionally: Tanzania’s Taifa gasoline to shake-up Kenya’s cooking gasoline market
Implications for the East African cement market
The end result of this bidding battle will have an effect on the East African cement market. If profitable, Savannah Clinker’s acquisition of Bamburi Cement would strengthen Kenya’s place within the regional building business and probably result in elevated competitors between Kenyan and Tanzanian companies.
Alternatively, if Amsons Group had been to prevail, it might mark a shift within the steadiness of energy within the East African market, with Tanzanian companies gaining a stronger foothold in Kenya. This might result in elevated competitors and probably decrease costs for customers, nevertheless it might additionally increase considerations about international possession of key industries in Kenya.
Because the bidding battle between Savannah Clinker and Amsons Group continues to unfold, the way forward for Bamburi Cement hangs within the steadiness. Shareholders might want to fastidiously contemplate the monetary and strategic implications of every provide earlier than making their determination.
For Savannah Clinker, the trail ahead includes not solely securing the required regulatory approvals but additionally successful over shareholders and convincing them that their provide is in one of the best long-term pursuits of the corporate. The agency’s dedication to retaining Bamburi’s Kenyan id and investing in its future might show to be a decisive issue on this high-stakes battle.
Because the deadline for closing affords approaches, all eyes will likely be on the East African cement market, the place the rivalry between Kenyan and Tanzanian companies is about to form the way forward for the area’s building business. Whether or not Bamburi Cement stays below Kenyan possession or turns into a part of a Tanzanian conglomerate, the result of this bidding battle can have lasting repercussions for each international locations and the broader East African market.
