PPC , South Africa 's largest cement producer , recently received a merger proposal from its unlisted rival Afrisam . On condition that Afrisam acquires a stake in PPC. The proposal will consolidate the interests of South Africa's two largest cement producers in the Public Investment Corporation ( PIC ), making them the largest shareholders in PIC.
The Public Investment Corporation owns 12.57% of the shares of PPC and 66% of the shares of Afrisam. The two groups will have a combined share of about 60% of the local cement market, so there are questions about whether the deal will be approved by the local Competition Commission.
Afrisam said the company needed to reposition itself to face competition from international cement giants in Africa, including Nigeria 's Dangote Cement and the soon-to-be-merged LafargeHolcim .
In September this year, PPC has been in a chaotic state in the management of shareholders'holdings, resulting in a 1/4 decline in the company's stock. Therefore, the merger is still more likely.
Both PPC and Afrisam are currently looking for market development opportunities in response to depressed cement demand, oversupply and increased competition in the difficult South African cement market.
Editor's note : The Public Investment Corporation (PIC), founded in 1911, is the manager of South Africa's 1.2 trillion state-owned funds and currently manages 23 government trustees. It includes the Civil Service Pension Fund, the largest pension fund in South Africa, the Unemployment Insurance Fund and the Compensation Fund. For a country with a savings rate of only about 16% of GDP (China's savings rate is about 50%), this fund plays an important role in economic development. PIC has long driven South Africa's economic growth by investing in local government loans, state-owned corporate bonds and national strategic development projects such as infrastructure.
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