* Merger to enable Lafarge to grow in Africa
* To sell products across the continent
* Deal to close in second half of 2014, subject to approvals (Adds cement demand projections in paragraph 9)
By Chijioke Ohuocha
LAGOS, June 3 (Reuters) - French cement maker Lafarge will combine its South Africa business with publicly traded Nigerian unit Lafarge Wapco, listing its Africa interests together on the Lagos bourse, its country chief executive officer said on Tuesday.
Guillaume Roux said the deal, worth $1.35 billion, will see the Lafarge group get $200 million in cash and 1.4 billion new shares in Lafarge Wapco to effect the merger.
The new company, Lafarge Africa Plc, will have a market capitalisation of more than $3 billion and will be listed on the Nigerian Stock Exchange, Roux told a news conference. Lafarge group will own 73 percent of the combined entity.
The combined company would seek to boost capacity by 5.5 million tonnes to 17.5 million tonnes after the merger.
“The consolidation will enable the enlarged entity to accelerate growth on the continent and expand its product offering in South Africa across the region,” Roux said.
He said Standard Chartered Bank acted as independent valuation adviser on the deal while Nigerian-based investment bank Chapel Hill Denham was financial adviser on the merger. Lafarge Africa will become the sixth highest capitalised company on the Nigerian bourse, Roux said.
Lafarge faces intense competition in Africa, especially from arch rival Dangote Cement, owned by Africa’s richest man, Aliko Dangote. The company, Nigeria’s biggest with a market capitalisation of around $24 billion, is set to roll out cement plants across Africa.
The combined entity accounted for $1.25 billion in 2013 annual sales, and earnings before interest, tax, depreciation and amortisation (EBITDA) stood at $345 million.
Roux said cement industry demand was projected to grow by around 14 percent over the next five years in Nigeria while it will grow by around 4 percent in South Africa over the same period.
Lafarge owns 60 percent of Lafarge Wapco, its listed subsidiary in Nigeria, 58.6 percent of another Nigerian listed company Ashaka Cement Plc, and 100 percent of Atlas cement company limited. It has joint ownership with Holcim of privately held United Cement Company of Nigeria. It owns 100 percent of the Lafarge South African business.
Roux said he expected the deal, which is still subject to shareholders’ and regulatory approvals, to close in the second half of the year.
Shares in Lafarge Wapco closed flat at 113 naira per share on Tuesday, valuing it at 337.6 billion naira, while Ashaka Cement gained the maximum 10 percent allowed to 25.99 naira. (Editing by Tim Cocks, William Hardy, Kevin Liffey and Mohammad Zargham)