Africa-Press – Zambia. Chinese firm, Huaxin Hainan Investment, plans to acquire a majority stake in local cement manufacturer, Lafarge Cement Malawi, The Business Times has learnt.
The firm has expressed intent to acquire a 75 percent stake in listed-Lafarge Zambia plc at an enterprise value of $150 million, with the remaining 25 percent expected to be given to the public.
The investor will spend about $10 million (about K8 billion) to acquire the local entity, according to Chinese media reports. Lafarge Cement Malawi has a cement grinding mill with a yearly capacity of 250,000 tonnes.
It is owned by French cement maker Financière Lafarge, which happens to be a major shareholder in Huaxin through its subsidiary Dutch finance firm Holchin.
The deal would give Huaxin an output of 1.75 million tonnes of cement a year in the two countries according to Chinese media reports. A statement published by Lafarge Zambia shows that Lafarge Holcim holds a 41.8 percent shareholding in the Huaxin Group.
Lafarge Malawi spokesperson Violet Mangani was yet to respond to our emailed questionnaire as we went to press. However, the deal is still subject to approval by local authorities.
Principal Secretary for Mining Joseph Mkandawire could not confirm on the matter but asked for more time to consult. He was, however, quick to mention that it would be okay for such a transaction to be conducted.
In an interview, Minister of Industry Roy Kachale also said the government had no problems with the plan as ownership is changing hands through two foreign investors.
“As long as it does not lead to loss of jobs and cause a shortage of the product on the local market, it is a transfer between two foreign investors. I don’t see any problems,” Kachale said.
The Competition and Fair Trading Commission (CFTC), a government entity mandated to regulate, monitor, control and prevent acts which are likely to adversely affect competition and fair trading in the country, says it is working with regional counterparts in vetting the deal.
CFTC spokesperson Innocent Helema said in a phone interview that the commission has since engaged the Common Market for Eastern and Southern Africa (Comesa) Competition Commission before it takes a step.
“Since it involves a number of Comesa member states, we have yet to get advice from Comesa on this. They will advise soon on whether CFTC or Comesa Competition Commission will handle it,” Helema said.
But International Trade and Competition Law expert Lewis Kulisewa said if reports were accurate, the transaction, whose effect transcends one territorial jurisdiction, would be notifiable to a relevant regional competition authority such as Comesa Competition Commission.
“A decision on whether or not the transaction satisfies the definition of a merger as provided in the relevant competition regulations can only be made upon thorough assessment of the information provided by the merging parties. At this stage, it would be premature to reach such a conclusion,” Kulisewa said.
As of December 31 2020, Huaxin was present in 13 provinces in China and six countries abroad with almost 250 subsidiaries and branches. Its total assets were recorded at over 43 billion Yuan, sales of over 29 billion Yuan and has 16, 860 employees.
