Tanga Cement issues new cautionary note amid merger saga

Dar es Salaam. Tanga Cement Company Limited (TCCL) has issued a note asking its shareholders to exercise caution when dealing in its securities because of the pending acquisition process.

The company’s board chairman, Mr Patrick Rutabanzibwa, said in a statement released on Monday this week that with the ongoing acquisition plan still inconclusive, it was important to note that uncertainty exists on the final acquisition price.

The price, he said, remains subject to adjustments related to debt, working capital, other expenses, and other potential adjustments post-closing.

“Shareholders of Tanga are cautioned that there is no certainty that all the remaining conditions to the acquisition will be fulfilled, or waived, promptly,” he said. Tanga cement is publicly listed and its shares are traded at the Dar es Salaam Stock Exchange (DSE). The statement comes a few months after the board of directors of Tanga Cement was informed that the Fair Competition Commission (FCC) had granted unconditional approval for Scancem International DA (Scancem) to acquire shares of AfriSam Mauritius Investment Holdings Limited in Tanga Cement, which was blocked by a tribunal.

Scancem International DA (Scancem), a subsidiary of Heidelberg Cement AG, also owns Twiga Cement in Tanzania. The Tanga Cement acquisition process started in October 2021 when Scancem International DA (Scancem) and AfriSam Mauritius Investment Holdings Limited, owner of Tanga Cement, issued a joint statement that they had finalised the terms upon which the former would acquire a 68.33 percent stake in Tanga Cement.

The Fair Competition Commission (FCC) approved the proposed takeover before the Fair Competition Tribunal (FCT) blocked the planned merger when some interested parties opposed the decision on the grounds that allowing it to go ahead would prevent, restrict, or distort competition in the market in violation of the Fair Competition Act, 2003.

But in an interesting turn of events, the FCC issued an advertisement on February 11, 2023, in which it said it had begun the review and investigation of the intended merger between Scancem International DA and Tanga Cement Plc. The February 2023 announcement by the FCC followed a new application that was submitted by Scancem International in December 2022 in its renewed bid to acquire Tanga Cement.

The review and investigation, the FCC said, were meant to examine whether the acquisition was likely to harm competition or not. But the approval by the FCC of the merger, which was earlier blocked through the FCT in September 2022, has sparked a number of legal battles on various platforms.

In his cautionary note, however, Mr Rutabanzibwa said that, as highlighted in the announcement on October 4, last year, the revised transaction terms of the acquisition comprise an enterprise value of an aggregate amount of $155 million (about Sh356.5 billion) for Tanga Cement.

This translates to an indicative price of Sh2,265 per share.