Senate Clears $1bn Lafarge Sale to Chinese Firm, says 16.19% Nigerian Stake Intact

The senate has endorsed the proposed $1 billion acquisition of Lafarge Africa Plc by Hainan Huaxin Pan-African Investment Company Plc, a Chinese company.

The senate stated that the transaction will not affect the 16.19 percent equity held by Nigerian investors.

The upper legislative chamber approved the transaction on Thursday after adopting the report of its ad hoc committee chaired by Abba Moro, senate minority leader.

The committee was constituted seven months ago to investigate the proposed sale by Holcim AG, the Swiss building materials company, following concerns about Lafarge Africa’s ownership structure and the implications of the deal.

Presenting the report, Moro said the committee engaged relevant stakeholders and found no legal impediment to the acquisition.

He recommended that the senate allow the transaction to proceed, subject to strict compliance with Nigerian laws and continued regulatory oversight.

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

The committee also urged regulatory agencies, including the Securities and Exchange Commission (SEC), Corporate Affairs Commission (CAC), Federal Competition and Consumer Protection Commission (FCCPC), Nigerian Investment Promotion Commission (NIPC) and Bureau of Public Enterprises (BPE), to maintain rigorous oversight of the transaction.

The committee further recommended that the new investors strengthen their corporate social responsibility (CSR) programmes in host communities.

According to the report, public concerns over the transaction stemmed largely from the misconception that Lafarge Africa is wholly Nigerian-owned.

The committee said the proposed acquisition represents the transfer of ownership from one foreign investor to another because Holcim, the company’s majority shareholder, is divesting its stake to another foreign investor.

It added that the transaction would not diminish or alter the rights of Nigerian shareholders, whose 16.19 percent equity stake in the company would remain intact.

The committee also said relevant regulatory agencies found no evidence that the acquisition breached Nigeria’s legal or regulatory framework or posed any immediate threat to national security.

The committee added that Huaxin had committed to injecting fresh capital into Lafarge’s operations in Nigeria and across Africa, a move expected to strengthen the company’s operations, stimulate industrial growth and support foreign direct investment.

The report further noted that Lafarge controls about 18 percent of Nigeria’s cement market and that the acquisition would not significantly alter competition in the industry.

It said the FCCPC had received assurances from the acquiring company that there would be no staff retrenchment during the transition.

NINGI QUERIES OWNERSHIP STRUCTURE

During debate on the report, Abdul Ningi, senator representing Bauchi central, questioned the ownership structure presented by the committee.

Ningi said the report disclosed that Nigerian interests, including the federal government and public investors, own about 16 percent of Lafarge Africa, while Holcim controls 18 percent.

He said the report failed to explain who owns the remaining 66 percent of the company’s shares.

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

Ningi also said the transaction did not involve the sale of a strategic Nigerian asset but rather the transfer of ownership 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.”

Osita Izunaso, chairman of the senate committee on capital market, and Shuaib Salisu, senator representing Ogun central, also backed the committee’s recommendations.

The senate subsequently adopted the report, effectively giving legislative backing to the transaction.

BACKGROUND

The senate’s endorsement comes months after its committee on capital market opened an investigation into Holcim Group’s planned divestment of its 83.81 percent stake in Lafarge Africa.

During the probe, SEC said it had not received any formal filing on the proposed sale, adding that it had only been notified of an internal restructuring within Holcim.

The BPE also told lawmakers that the shares being divested belonged to Holcim and did not affect the 16.19 percent equity held by Nigerian investors.

Following the briefing, the senate committee summoned Lafarge Africa’s management and sought further details from the CAC as part of its review of the transaction.