BUA acquires Sokoto, Okpella Cement companies
• Budgets $300m for expansion
From ISAAC ANUMIHE, abuja
One of Nigeria’s emerging and fast growing indigenous conglomerates, BUA Group has made a daring acquisition of Sokoto Cement 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 who was ecstatic at the consummation of the deal described the acquisition as 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 two 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 said.
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 equipment, 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.
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 per cent 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.
The acquisitions are coming exactly one year after BUA Cement 1 floating terminal was launched into the Nigerian market.
BUA is currently into the production of sugar and flour with factories located in Apapa & Kano. The BUA Sugar Refinery, which is only the second of its kind in West Africa has an installed capacity of 720,000metric tones per annum and is presently producing at 85 per cent of installed capacity. BUA Group is carving a niche for itself in the real sector with the on-going acquisitions and expansion of its installed capacities.