Inside battle for control of Bamburi Cement

The battle for control of Bamburi Cement has reached fever pitch, with shareholders racing against time to cast their votes by December 5.

At stake is the future of Kenya's leading cement maker, as two formidable bidders vie for supremacy.

In one corner is Savanna Clinker, a Kenyan powerhouse led by Benson Sande Ndeta, upping their offer from Sh70 per share in August to Sh76.55 —totaling  Sh27.8 billion.

In the other is Tanzania’s Amsons Group, headed by CEO Edha Nahdi, equally determined to clinch the deal.

Bamburi Cement is expected to reveal the most popular offer by December 20, paving the way for share transfers. Payments to shareholders are slated for February 28, 2025, barring any changes from the Capital Markets Authority (CMA).

Under market regulations, bidders retain the right to adjust their offers up to 10 days before the deadline, keeping tensions high as the clock ticks down.

According to Ndeta, the offer comes from a patriotic Kenyan who has the best interests of Kenyan companies at heart.

He is relying on the backing of Faida Investment Bank which in a statement said that they have sufficient resources to satisfy the maximum amount of cash payable under the offer.

“We further confirm that the competing offer will not fail due to insufficient financial capacity of the competing offeror and that every Bamburi shareholder that opts to accept the competing offer shall be paid in full,” said its Managing Director Lucas Otieno in an October 18, 2024, letter to CMA.

In the statement, the bank said that they had received a letter from the Global Infrastructure Finance and Development Authority (GIFDA) attesting its commitment to finance the competing offeror’s acquisition of Bamburi cement.

“GIFDA, the financier, had made sufficient funding arrangements and has confirmed that the funds are free and unencumbered and are available to Savannah Clinker Limited,” read the statement.

“Additionally, Faida has received a statement showing the assets held by GIFDA in Fidelity Investments.”

Amsons bid is backed by the Kenya Commercial Bank (KCB) and they have offered to pay Sh65 per share or Sh23.59 billion for a 100 per cent stake in Bamburi through its Kenyan subsidiary and investment vehicle, Amsons Industries (K) Ltd.

“According to the offeror’s statement, KCB Investment Bank Ltd, being the transaction advisor and sponsoring stockbroker of Amsons has confirmed that Amsons has sufficient financial resources at its disposal to satisfy the consideration for all shares in Bamburi pursuant to a full acceptance of the offer,” said Bamburi after the Amsons offer.

Amsons bid recently got regulatory approval from Common Market for Eastern and Southern Africa’s (Comesa) Competition Commission.

“The approval is a significant boost to our offer as we continue to engage investors of Bamburi Cement and remain confident that our acquisition bid will be successful as it presents a win-win scenario for the investors and our two countries,” said CEO Nahdi.

CMA has already given the green light to shareholders to consider and pick the deal that serves their interests between the two.

Asked why they never upped their offer, Ahmed Abdallah from Amsons said that the Sh65 was made after consideration of Bamburi’s market value.

“We continue to be very confident that our legitimate offer, which represents a 42 per cent premium on the closing market price of Bamburi Shares at 45.65 KSHs per share, is the best and most competitive offer for Bamburi shareholders.”

They promised to pump in Sh51.8 billion to modernise the company’s grinding and clinker plants to ensure its continued growth.

Amsons remains confident that shareholders will choose them despite their offer per share being more than Sh11 lower than Savanna’s.

On their website, Amsons Group says that since 2000 they have established themselves as a leader in Tanzania, with diversified investments across key sectors including construction, transportation, cement, flour and inland container depots.

“We proudly employ over 10,000 Tanzanians, reflecting our dedication to fostering local talent and economic growth.”

They also have interests in the oil and gas sector with an over 215 million litres capacity depot.

“Our ongoing commitment is to create sustainable employment opportunities and contribute significantly to the nation’s progress.”

The company has an annual turnover of Sh130 billion.

In the cement world, they run a 6,000-tonne-per-day facility and they recently acquired one of their competitors Mbeya Cement.

They also have companies in Malawi, Mozambique, DRC, Zambia and Burundi.

In June, Bamburi’s major shareholder Holcim agreed to sell their shares to Amsons but revoked it on October 2 after Savanna’s offer.

This came as good news to Savanna as this agreement had locked them out of the race since one needs the backing of at least 60 per cent of total shares to complete the sale.

Holcim owns 58.6 per cent of Bamburi through Fincem Holding Ltd (29.3 per cent) and Kencem Holding Ltd (29.3 per cent), which opens the door for them to sell to Savanna.

The two are registered in Jersey Island and also share the same address.

The remaining is owned by Standard Chartered nominees (15.68 per cent, 0.72 per cent and 2.80 per cent), Aksaya Investment Holdings (11.12 per cent) and SIB (1.11 per cent).

Kestrel Capital nominees (0.85 per cent and 0.34 per cent) and APA Insurance Limited (0.29 per cent) while other 4,599 shareholders own 8.48 per cent.

Before the Bamburi offer, Ndeta last year secured Sh65 billion for the construction of a clinker factory in Kitui County

Betting on the construction boom that is in the country, Ndeta said that he raised the money through a privately placed debt arrangement and the bond to be regulated at the international exchange.

He told the media at the time that he was proud of getting funding from people he said shared his vision and beliefs to deliver growth and development in the construction sector.

Ndeta joined billionaire Narendra Raval as a major player seeking to pocket some Sh6.3 billion that factories without grinders pay to import clinker, which is crucial in the manufacturing of cement.

Interestingly, Savanna Cement which went under in more than Sh18 billion debt does not have a clinker factory and Ndeta once served as its chairperson.

For a man who loves golf which is considered a slow sport and law tennis which is quite a fast-paced game, Ndeta has been in the cement sector for more than 20 years.

He started as the Chairman of the now struggling East African Portland Cement Limited in June 2003 when he was appointed by the then Trade Minister Mukhisa Kituyi, serving until June 2008.

Ndeta was the majority shareholder of Savanna Cement Limited until November 18, 2022, when his shares were taken over by the banks.

The company went into administration on July 21, 2023, under PKF Consulting Kenya partner Peter Kahi after making a net loss of Sh2.5 billion in 2022 and Sh1.07 billion in 2020.

By the time it went under, Savanna Cement had made a cumulative loss of Sh7.86 billion.

In August 2024, the sale of its assets which were valued at Sh10.9 billion in October 2022, commenced to help compensate some of its creditors.

KCB Bank is owed Sh8.89 billion, while Absa Bank is owed Sh5.23 billion.

Ndeta said that he has no intentions of delisting Bamburi from the Nairobi Stock Exchange (NSE).

On the other hand, Amsons say that if they acquire at least 75 per cent but fewer than 90 per cent of Bamburi shares they may take steps to delist its shares from NSE, subject to corporate and regulatory approvals.