Chinese firm reaches final deal to acquire Nigerian cement company to rival Dangote, BUA, others

Huaxin Cement Company, the Chinese firm expected to buy out Holcim’s 83% stake in Lafarge Africa, has reportedly valued 100% of the company’s shareholding at $1.6 billion......Read The Full Article>>.....Read The Full Article>>

The group is set to spend $838.8 million to acquire Holcim’s stake in Lafarge Africa, estimating the company’s enterprise value to be between $1.06 billion and $1.59 billion.

According to a report by Business Day, the company’s valuation was disclosed in its filing on the Hong Kong Exchange.

This estimated cement prices in Nigeria at between $100 and $150 per tonne, based on Lafarge’s annual production capacity of 10.6 million tonnes.

The firm also assumed the replacement value of Lafarge Africa’s assets to be $1.2 billion to $1.4 billion, with an enterprise value of $1.057 billion.

The Chinese firm used an alternative valuation approach: it multiplied Lafarge Africa’s 2023 EBITDA of $151 million by a factor of seven, resulting in an enterprise value of $1.057 billion.

Lafarge Africa stated that the acquisition aligned with Huaxin’s overseas expansion plan, focusing on leveraging its expertise in industrial technology and production chain integration to drive growth.

Huaxim also aims to counter the effects of China’s domestic market shutdown and could mark a significant shift in Nigeria.

Indian cement firms previously dominated the sector before the arrival of Dangote Cement, Africa’s largest manufacturer.

Huaxin’s entry into the Nigerian cement industry will mark the beginning of the introduction of new technologies, production methods, and pricing models.

If finalised in August next year, with the exchange rate at N1,700 per dollar, Lafarge Africa’s market cap would be about N1.87 trillion.

Since the deal was announced on December 1, 2024, the cement company’s share price has skyrocketed by 21%, hitting a high of N70.15 as of December 3, 2024.

Experts said the new deal could cause cement prices to crash in Nigeria, as the new company will have a different pricing model and new technology.

Cement prices in Nigeria have soared recently, with brands selling for as much as N8,000 per 50kg and N7,500 amid a spike in construction costs.