In a bid to strengthen its market positioning and expand its brand profile in the competitive market place, BUA Group - one of Nigeria’s emerging and fast growing indigenous conglomerates, has made a daring acquisition of Sokoto Cement, CCNN and Edo Cement Company located in Okpella in Etsako East local government of Edo State.
The deal, many industry analysts believe, is a significant milestone and the final affirmation of BUA as a major player in the league of cement manufacturers in the country. The acquisition gives BUA 50.7 percent majority stake in Sokoto Cement - CCNN, which has an installed capacity of 500,000 tonnes and 87 percent equity control of Okpella cement company with an installed capacity of 350,000 tonnes.
For Okpella cement, BUA has unfolded a 300 million dollar, plan to upgrade and modernise its production processes by installing another 2 million tonnes capacity line before the end of 2011 which will bring the total production capacity of the company to 2.350 million tonnes per annum from the current 350,000 tonnes.
The Chairman and Chief Executive Officer of BUA Group, Abdulsamad Rabiu was ecstatic at the consummation of the deal. He stated that the acquisition is an exciting opportunity in the sense that it has launched BUA firmly into the cement manufacturing business in the country. “This is something we always wanted to do. And for two years we have been struggling to get a mining license which is a requirement to build a cement factory. For us, this is God-sent. We are now going ahead fully to expand Okpella by putting a 2 million tonnes line in there between now and end of 2011. We will completely revitalize the place, in the process, creating employment opportunities while ensuring that cement is made available to the average Nigerian at affordable prices”.
He revealed that his company was in a unique position to meet its target because a lot of companies all over the world that had earlier ordered for plants have had to cancel because of the economic meltdown and the inability of some of them to raise the required financing.”
Before the meltdown, manufacturers were using 3-4 years to deliver on orders for cement equipments, but with the cancellations of prior orders, it is now possible to deliver the equipment for the new lines on time. “We are in good financial position to ensure that,” he stated.
Another official of the company revealed that the issue of power which for long has been a challenge will be resolved since there is a gas pipeline just about 20 kilometers away from the cement factory. “We are going to tap into it, gas as you know is cleaner and more environmentally friendly.”
Even though company officials have kept tight lips on the cost of the transaction, competent sources close to the negotiations put the cost of both companies at a princely 100 million dollars which translates to N15 billion. This is premised on about 700million shares at the current market price of N10/share for 50.7% of CCNN giving N7billion and the balance going for Okpella Cement Company. It is however not certain if a premium was paid for the companies.
It can also be revealed that the BUA Group is retaining the current foreign technical management in both companies for their expertise in cement production and continuity.
BUA International, it will be recalled was one of the six companies licensed by the Federal Government last year to bring into the country bulk cement which is then re-bagged for sale. The move was to stem the rising cost of cement which had peaked at N2,000.00 per 50km bag. To achieve that objective, the company immediately purchased a 40 million dollar floating terminal called BUA Cement.