Africa-Press – Tanzania. TANGA Cement shares demand has surged following announcement that the firm is sold to Twiga Cement parent company.
The demand pushed up the Tanga-based cement firm price by almost 10 per cent to 450/- at the closing of trading on Wednesday. Tanga trades as Simba Cement.
Orbit Securities Head of Research and Analytics, Mr Imani Muhingo said yesterday that the announcement had already altered the price and momentum on the counter. “…We see more bids and zero offers while at the same day of the announcement…,” Mr Muhingo told ‘Daily News’. Yesterday, Tanga Cement issued a cautionary note following the proposed acquisition by Scancem International of 68.3 per cent held by AfriSam Mauritius Investment and the Tanzania public institutions and individuals’ 31.7per cent.
The indicative price values the company at approximately 201bn/-, while taking the latest unaudited Simba numbers the total debt stands at about 177bn/-, this roughly leaves a value of 374/- per share, less than the current trading price.
“I just hope the public shall take the announcement by its title, a ‘cautionary notice’, and trade the shares with caution, because, as the notice says, the indicative price is subject to adjustments, the most significant being Simba’s huge debt,” Mr Muhingo said. However, he said “we all wait to see how the adjustments shall affect the final acquisition price”.
The 137.33bn/- takeover is now waiting for regulatory approvals from the Tanzania Fair Competition Commission (FCC) and the Tanzania Mining Commission (TMC), among other regulators in and outside the country.
The Vertex International Securities Advisory and Capital Markets Manager, Mr Ahmed Nganya said shareholders of Simba Cement should expect a huge windfall if the acquisition materializes.
“We understand they have set the timeline for the second quarter of next year. However, it might take longer as this involves multiple regulatory authorities including Tanzanian and South African,” Mr Nganya told ‘Daily News’ yesterday. Normally, he said, the price of Tanga Cement is expected to rise, as current shareholders would not be ready to part ways with their holdings without a gain.
“We forecast the price to continue to increase as investors will flock into the counters anticipating the huge capital gain from the announced acquisition,” Mr Nganya said.
The buyout also will need to get the approval by shareholders of Tanga Cement by way of special resolution passed at an extraordinary meeting as required by the Capital Markets and Securities—substantial acquisitions, takeovers and mergers—Regulations, 2006.
Other conditions include, The Tanzania Revenue Authority (TRA) issuing a tax clearance certificate in relation to acquisition and approval by the Financial Surveillance Department of the South African Reserve Bank.
Scancem is a subsidiary of Heidelberg Cement, which owns Twiga Cement while AfriSam is the owner of Tanga Cement.
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