Businessman seeks to upstage Tanzania firm in Bamburi buyout

 

Bamburi Cement trucks collect cement from a Silo storage facility in Industrial Area Nairobi. [Stafford Ondego, Standard]

One of the founders of troubled Savannah Cement has made a counteroffer to the owners of Bamburi Cement, setting the stage for a fight with Tanzania’s Amsons Group which in July made an offer to buy Bamburi.

Savannah Clinker, wholly owned by businessman Benson Ndeta, yesterday said it would pay Sh25.42 billion for Bamburi Cement’s entire stake.

This is Sh1.81 billion more compared to the Sh23.59 billion that Amsons had offered.

In its competing offer, Savannah Clinker said it would pay Bamburi’s shareholders Sh70 per share, which is Sh5 more than the Sh65 per share offer made by Amsons. 

Both prices are premium on the current share price of Sh64.50 a share and Sh42 per share in July when Amsons made its offer.

Ndeta, listed as the owner and executive chair of Savannah Clinker, was the majority shareholder of the troubled Savannah Cement until July last year when it was placed under administration.

The administrator has recently started the process of selling its assets to recover money owed to KCB Group and Absa Bank Kenya. In the offer to Bamburi, Ndeta said he is in the process of exiting as director of Savannah Cement.

Amsons had earlier said it had received an irrevocable undertaking from Bamburi Cement’s major shareholder, Holcim. 

“Savannah Clinker Limited (the competing offeror) notifies the public that it has on August 27, 2024, served Bamburi Cement with a notice of intention to acquire up to 100 per cent of the ordinary shares on Bamburi,” said Savannah Clinker in the notice published yesterday.

“The competing offer price will be Sh70 for each ordinary share of Bamburi.”

The firm noted its offer was a premium of 64.55 per cent on Bamburi shares over the last 30 days when it traded at an average of Sh42.54.

In a bid to upstage Amsons, Savannah Clinker said its offer would be fast-tracked with a completion date of February next year against Amsons’ offer that is expected to be concluded by November next year.

It also pointed out that its offer only needed approval by the local competition watchdog – the Competition Authority of Kenya (CAK) – unlike Amsons offer which would be subject to approval by the regional Comesa Competition Commission. 

Holcim, the Swiss cement giant, owns 58.6 per cent of Bamburi’s total issued share capital through Fincem Holding (29.3 per cent) and Kencem Holding Ltd (29.3 per cent).  Kenyan institutions and individuals own an estimated 32.17 per cent of Bamburi shares while another 9.23 per cent is held by other foreign investors.

Following its offer, Amsons said it had “received an irrevocable undertaking” from Fincem and Kencem and further said that “under the terms of the Undertaking, each of Fincem and Kencem has irrevocably undertaken to Amsons to… not solicit, entertain, negotiate or accept any offer to purchase the Subject Shares other than the Offer.”

Amsons, a family-owned business founded in 2006, has diversified from its roots in bulk oil and petroleum products to become a manufacturing and energy conglomerate with over $1 billion (Sh130 billion) in annual revenue.

Its cement operations include a 6,000-tonne per day facility and Mbeya Cement, recently acquired from Holcim.

Savannah Clinker’s Ndeta on the other hand is an old hand in Kenya’s cement industry. He was the chairman of one of Kenya’s oldest cement makers, the East African Portland Cement, in 2003.

He teamed up with local and foreign shareholders to start Savannah Cement in 2012, which grew fast to claw market share from the industry’s older players, with a 15 per cent share of the market by 2015.

Savannah Cement has however been weighed by debts that were taken as it sought to implement ambitious growth plans. 

The firm was put into administration last year in July and at the start of this month, the administrator invited buyers to express interest in acquiring Savannah Cement’s different assets including the cement milling plant and land. The firm owes different creditors Sh18 billion, of which Sh14 billion is owed to local lenders KCB Group and Absa Bank Kenya.

Shareholder fights may have also contributed to the collapse of what was a fast-growing cement maker. Sande and his fellow shareholders have been in vicious and lengthy fights over the control of the firm. 

Initially, Savannah Cement was owned by a group of Kenyan and Chinese investors. Kenyan firm Savannah Heights owned 40 per cent while Chinese investors through Wanho International and Acme Wanji Investment owned 60 per cent of the cement maker.

Savannah Heights was owned by Benson Ndeta (35 per cent), John Gachanga (35 per cent) and Donald Mwaura (30 per cent). The squabbles began in 2014 when the Chinese firms exited and sold their stake to Seruji, owned by Ndeta and saw him emerge as the majority shareholder in Savannah Cement. 

The other two local shareholders protested, arguing that they too should have been offered a right to buy the Chinese stake on their exit. The three shareholders have since been embroiled in legal battles.