By Nqobile Dludla and Chijioke Ohuocha
JOHANNESBURG/ LAGOS (Reuters) – PPC said on Friday that Nigeria’s Dangote Cement had withdrawn its interest in a tie-up with the South African firm, sending its shares down more than 13 percent.
Africa’s richest person Aliko Dangote joined the race to buy South Africa’s biggest cement producer in September. PPC is already the subject of an all-share merger bid by local rival AfriSam that values it at $700 million.
“Shareholders are advised that, on 5 October 2017, the Board received from Dangote a formal withdrawal of its interest in respect of the Proposed Combination,” PPC said in a statement.
PPC gave no reason for the move but a Dangote source said Dangote was concerned about the commercial logic of the deal after the local competition watchdog had scrutinised it.
“Essentially we’ll be buying market share subject to stipulations/conditions placed by the anti-competition commission,” the source said. Dangote’s South African unit Sephaku is the country’s largest cement maker.
Shares in PPC fell 13.64 percent, before recovering some ground to trade 4.34 percent lower at 6.17 rand at 1121 GMT. The price was still above AfriSam’s 5.75 rand offer price.
The interest from Dangote Cement, with a market capitalisation of $12 billion, had raised hopes of a bidding war and pushed PPC’s share price above AfriSam’s offer price.
“The general feeling was that Dangote would provide some sort of stability as well as capital going forward,” Independent Securities trader Ryan Woods said.
(Reporting by Nqobile Dludla; Editing by James Macharia and Alexander Smith)