10 December 2018

Nigeria: CCNN/BUA Merger - Shareholders to Get Higher Dividend - Mikail

interview

The National Chairman, Constance Shareholders Association of Nigeria, Mr. Shehu Mallam Mikail, in an interview with Financial Vanguard spoke on the merger between Cement Company of Northern Nigeria, CCNN Plc and BUA Cement, saying that shareholders will benefit more from the combined entity. He also said that the merger will also enhance the output of cement production in the country. Excerpts:

WHAT is your view with the proposed merger between CCNN Plc, a quoted company and BUA Cement, an unquoted entity?

The proposed merger between CCNN and BUA Cement is a good one that has received shareholders nod. Yes, CCNN is a quoted company, while BUA is unquoted entity, so what matter is what the deal will bring to shareholders and the combined entity as a whole. We have been informed by the Board of Directors of CCNN what the relationship will bring to us as shareholders.

What are the benefits of this merger?

Once the regulators approved the merger the combined entity would have a total installed capacity of two million metric tonnes per annum as we were told. It is our hope that this combination would help to crash the price of cement. However, government should complement in this regard to come up with reasonable policies that will attract manufactures to increase output. If supply is greater than demand, the price will naturally crash. It will enable average Nigerians to build houses of the own.

More so, the proposed merger would position CCNN for better competitiveness within its home market and also enable it utilise the more modern plant and equipment of the BUA Cement to boost its market penetration and export potential.

What value will the merger bring to shareholders?

Over the years, the company has always delivered value to all stakeholders and this proposed merger is in continuation of that. CCNN has consistently performed well in key metrics such as capacity utilisation but growth has been hampered over the years due to limited expansion and lack of alternative fuel sources. So with this combination, we will have bigger dividend because the company will make more profit. Also, we would begin to see improved production.

BUA, a Kalambaina Cement firm has 1.5million metric tonnes per annum multi-fuel (coal, heavy oils and gas) powered cement plant to solve that issue with limited downtime and further opportunities for growth and expansion. The proposed merger also provides a compelling opportunity to capture significant synergies and create value for the benefit of the shareholders of both companies in the form of stronger competitive position of the enlarged company, economies of scale, enhanced operations and administrative efficiencies which are expected to accrue.

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