Corporate News
By VICTOR JUMA
In Summary
- The transaction giving ARM full control of Kigali Cement was finalised in April.
- The full acquisition means ARM will now have unfettered strategic control over the subsidiary, booking its entire future earnings.
- Kigali Cement has a production capacity of 100,000 tonnes per annum and this level is set to rise with ARM’s planned investments in the company.
Cement maker ARM has taken full control of Rwandese
company Kigali Cement, giving the fast-expanding manufacturer a stronger
foothold in East Africa’s fourth largest economy.
ARM Cement, which already owned 35 per cent of Kigali Cement, revealed in its newly released annual report that it has bought out shareholders who previously held a combined 65 per cent stake in the Rwandese manufacturer.
ARM Cement, which already owned 35 per cent of Kigali Cement, revealed in its newly released annual report that it has bought out shareholders who previously held a combined 65 per cent stake in the Rwandese manufacturer.
The transaction giving ARM full control of Kigali Cement was finalised in April.
“We finally acquired a 100 per cent equity stake
and full control of our Rwanda grinding plant, and are now planning to
increase capacity and market share through our Rhino Cement brand,” says
ARM chairman Rick Ashley in the report.
ARM chief executive Pradeep Paunrana declined to
disclose the acquisition cost, which is estimated at more than Sh106
million going by Kigali Cement’s net asset value.
The Kenyan cement firm says the acquisition is part
of its ongoing expansion plans, hinting at increased investments in the
subsidiary to grow sales in Rwanda and the neighbouring markets of
Burundi and the Democratic Republic of Congo.
The Nairobi Securities Exchange-listed firm first
bought into Kigali Cement in 2011 when it took a 35 per cent stake,
making it the single largest shareholder in the subsidiary.
This saw it take control of the company’s board and
management but it still had to deal with a large non-controlling
interest in the form of the co-investors who held the combined 65 per
cent stake.
The full acquisition means ARM will now have
unfettered strategic control over the subsidiary, booking its entire
future earnings.
Kigali Cement has a production capacity of 100,000
tonnes per annum and this level is set to rise with ARM’s planned
investments in the company.
The subsidiary’s net assets stood at Sh163.5 million last year, having dropped 8.6 per cent from Sh179 million in 2012.
ARM said it is expanding its cement production and
distribution network in the region where it is seeking to ride on
low-cost operations to grow sales and margins in an increasingly
competitive field defined by rising surpluses.
“We continue to further increase our market
presence in Kenya, Tanzania and Rwanda, and to complete ongoing
projects. We are also focusing our attention on new locations within the
region, for building a new clinker-based cement plant,” said Mr Ashley.
ARM is set to commission its Tanga plant, which has
a capacity to produce 1.2 million tonnes of cement per year, by the
fourth quarter when it is expected to start contributing to the group’s
earnings.
ARM is also set to start construction of its $300
million (Sh26 billion) Kitui factory in October, with a daily output
capacity of 8,000 tonnes.
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