Senate Backs $1 Billion Chinese Acquisition Of Lafarge Africa

The Senate has endorsed the proposed $1bn acquisition of Lafarge Africa Plc by Hainan Huaxin Pan-African Investment Company Plc, a Chinese-owned investment firm.

The upper chamber said the transaction would not affect the 16.19 per cent equity currently held by Nigerian investors in the cement company.

The Senate approved the deal during plenary on Thursday following the consideration and adoption of a report presented by its ad hoc committee, chaired by the Senate Minority Leader, Abba Moro.

The committee was constituted about seven months ago to investigate the proposed divestment by Holcim AG, a Swiss building materials company, amid concerns over Lafarge Africa’s ownership structure, regulatory compliance and the potential implications of the transaction for Nigeria.

Presenting the committee’s findings, Moro said lawmakers engaged relevant government agencies, regulators and other stakeholders and found no legal obstacle preventing the acquisition from proceeding.

He said the committee recommended that the transaction be allowed to continue, provided all parties complied strictly with Nigerian laws and remained subject to regulatory supervision.

“The Senate allowed the transaction process concerning the sale of Lafarge Cement Company Plc to Huaxin to scale through,” Moro said.

“However, all due processes and strict compliance with all Nigerian extant laws on the subject must be followed and adhered to strictly for a hitch-free transaction and transition process.”

Senate Demands Regulatory Oversight

The committee urged relevant agencies to closely monitor every stage of the transaction to ensure compliance with Nigeria’s corporate, investment and competition laws.

Naija News reports that the agencies listed include the Securities and Exchange Commission (SEC), the Corporate Affairs Commission (CAC), the Federal Competition and Consumer Protection Commission (FCCPC), the Nigerian Investment Promotion Commission (NIPC), and the Bureau of Public Enterprises (BPE).

The Senate also asked the new investors to strengthen Lafarge Africa’s corporate social responsibility programmes, particularly in communities hosting the company’s factories and other operations.

According to the committee, some of the public concerns surrounding the transaction arose from the mistaken belief that Lafarge Africa was wholly owned by Nigerian interests.

It explained that the proposed deal was largely a transfer of ownership from one foreign investor to another, as Holcim, Lafarge Africa’s majority shareholder, was selling its stake to Huaxin.

The committee said the rights and interests of Nigerian shareholders would not be reduced or altered by the acquisition.

It added that the 16.19 per cent equity held by the Federal Government and other Nigerian investors would remain intact after the transaction.

The committee said regulatory agencies consulted during the investigation found no evidence that the proposed acquisition violated Nigeria’s legal or regulatory framework.

It added that there was also no immediate indication that the deal posed a threat to national security or the country’s economic interests.

The report said Huaxin had undertaken to inject fresh capital into Lafarge Africa’s operations in Nigeria and other African markets.

According to the committee, the expected capital injection could improve the cement company’s operations, boost industrial activity and support the inflow of foreign direct investment into the country.

The report noted that Lafarge Africa controls about 18 per cent of Nigeria’s cement market, adding that the acquisition was not expected to significantly distort competition in the sector.

It also said the FCCPC had received assurances from the acquiring company that workers would not be retrenched during the ownership transition.

Ningi Questions Shareholding Structure

During the debate on the report, the senator representing Bauchi Central, Abdul Ningi, raised questions about the ownership structure presented by the committee.

Ningi said the report indicated that Nigerian interests, including the Federal Government and public investors, held about 16 per cent of the company’s shares, while another 18 per cent was attributed to Lafarge or Holcim.

He argued that the report did not clearly explain the ownership of the remaining 66 per cent of the company.

“I would have imagined that the report of the committee should specifically give us the shareholding structure,” Ningi said.

“Nigerians have about 16 per cent, Lafarge has 18 per cent. Who owns the remaining 66 per cent? We need to understand where we are coming from.

“It is only when we know who owns the remaining shares that we can determine whether Nigerians are actually benefiting from this transaction.”

The lawmaker also observed that the transaction did not amount to the sale of a strategic asset owned by Nigeria, but the transfer of shares between two foreign companies.

“There is a misconception about the ownership of Lafarge,” he said.

“The current development is basically the transfer from one foreign ownership to another. Lafarge is a foreign company transferring its shares to another foreign company.

“I would have expected the committee to point us to the specific provisions of Nigerian law that permit such a transfer and to clearly state the ownership structure before asking us to approve the transaction.”

Senators Back Committee Recommendations

The Chairman of the Senate Committee on Capital Market, Osita Izunaso, and the senator representing Ogun Central, Shuaib Salisu, supported the recommendations of the ad hoc committee.

Following the debate, the Senate adopted the report, effectively giving legislative backing to the proposed acquisition.

The Senate’s endorsement came months after its Committee on Capital Market began an investigation into Holcim Group’s plan to divest its 83.81 per cent stake in Lafarge Africa.

During the investigation, the SEC told lawmakers that it had not received a formal filing concerning the proposed sale at the time.

The commission said it had only been informed about what was described as an internal restructuring within the Holcim Group.

The BPE also told the lawmakers that the shares being sold belonged to Holcim and that the transaction would not affect the 16.19 per cent equity held by Nigerian investors.

Following the briefings, the Senate committee summoned the management of Lafarge Africa and requested additional information from the CAC as part of its review of the proposed transaction.