Chinese cement giant Huanxin Cement has acquired majority stake and taken over the troubled French local unit, Lafarge Zambia. According to a stock market note availed to the Zambian Business Times – ZBT, the Chinese firm has acquired 75% of all of Lafarge group interest in the Zambian cement manufacturer.
The other remaining 25% is publicly held by individual and institutional shareholders vis its listing on the Lusaka Securities Exchange – LuSE. Huanxin has also picked up the Lafarge Malawi unit at the same time, signaling a bigger group level transaction for Lafarges Southern Africa units.
Lafarge Zambia troubles began together with two other cement firms in Zambia when they were fined and asked to slash down their prices after Zambia’s anti-trust regulator – Competition and Consumer Protection Commission – CCPC found the company guilty for participating in a price cartel – see earlier article by ZBT on Cement firms defy CCPC.
And Lafarge Zambia company secretary Chibuye Mbesuma-Ngulube has confirmed the take over of Lafarge Zambia by Huanxin Limited of China. Ngulube stated that an agreement for the sale of 75% of the company was executed by majority shareholders in Lafarge Zambia i.e. Finaciere Lafarge and Pan African Cement to Huanxin for an enterprise value of USD150 million.
The Lafarge Zambia company secretary however indicated that this is a related party transaction as LafargeHolchim group holds about 42% shares in Huanxin group. Lafarge Zambia has two cement plants in Zambia, one in Lusaka Chilanga area and the other in Ndola’s Masaiti area. The combined production of the two plants is 1.5 million tons per annum with the aggregate plant producing about 600k tons.
A source within Lafarge has told ZBT that the transaction or acquisition of Lafarge Zambia has come as a suprise for the local staff. The source stated that anxienty has gripped most members of staff on the new owners and the conditions of service they would implement stating that most chinese firms level of staff compensation is lower compared to western owned multinationals.
Most senior managers and directors are expected to be exited as new owners usually want to come in with their own managers to introduce their new systems and drive a new organisation culture. This announcement has come as a shock stated the source.
According to the note released by Huanxin seen by ZBT, this transaction is subject to regulatory approvals, in Zambias case, CCPC, LuSE and the ministry of mines have been listed as the regulators that will need to give the transaction the blessings before its can be completed.
It is however not clear if this transaction if approved, will render the order by CCPC to Lafarge and two other cement firms to cut prices null and void. The other two firms athat were also fined and ordered to cut prices were Dangote and Sinoma Cement. All the three firms have not cut prices as the decision is now being awaited from the appeals tribunal.
see also more articles from ZBT on cement Kwacha depreciation blamed for escalating cement prices
