Chinese Company Reach an Agreement With Nigeria Cement Firm to Tackle BUA, Dangote and the Rest

 

China Based Firm Huaxin Cement Company, expected to buy out Holcim’s 83% stake in Lafarge Africa, has reportedly valued 100% of the company’s shareholding at $1.6 billion. 

The group will spend $838.8 million in acquiring Holcim’s stake in Lafarge Africa, estimating the company's enterprise value to be between $1.06 billion and $1.59 billion.

According to a report by Business Day, the company's valuation was disclosed in its filing on the Hong Kong Exchange. 

This estimated cement prices in Nigeria to be between $100 and $150 per tone, based on Lafarge’s annual production capacity of 10.6 million tones.

The firm also assumed the replacement value of Lafarge Africa’s assets to be $1.2 billion to $1.4 billion, with an enterprise value of $1.057 billion. 

The Chinese firm used an alternative valuation approach: it multiplied Lafarge Africa’s 2023 EBITDA of $151 million by a factor of seven, resulting in an enterprise value of $1.057 billion. 

Chinese firm to introduce new technology Huaxim also aims to counter the effects of China’s domestic market shutdown, which could mark a significant shift in Nigeria. 

Indian cement firms previously dominated the sector before the arrival of Dangote Cement, Africa’s largest manufacturer. 

Insiders have said Huaxin is developing a new pricing model that could disrupt the Nigerian cement industry and potentially crash prices.