BUA Group, a conglomerate controlled by Nigerian billionaire Abdulsamad Rabiu, has announced plans to merge its privately owned Obu Cement with the publicly traded Cement Company of Northern Nigeria Plc (CCNN), to create Nigeria’s second largest cement producer.
Cement Company of Northern Nigeria PLC in which Rabiu owns more than 97% currently produces 2 million metric tons of cement per annum (Mtpa) while Obu Cement has an annual production capacity of 6Mtpa.
Rabiu’s BUA Group which owns more than 95% of Obu Cement, explained in a recent press release on Wednesday that the move is in line with the company’s resolve to deepen the Nigerian capital markets and enhance the growth of the cement industry. BUA has notified the Nigerian Securities and Exchange Commission (SEC) and other regulatory bodies of the planned merger which is expected to be concluded next year.
Earlier this year, Rabiu merged Kalambaina Cement, another subsidiary of BUA Cement, with the Cement Company of Nigeria (CCNN). The combined company which adopted the CCNN corporate name has an installed capacity of 2Mtpa and a market cap of close to $600 million. If the planned merger goes through, CCNN would become the second largest cement company on the Nigerian stock exchange by annual output, while analysts expect the company’s market cap to triple or quadruple as new shares of CCNN will be allotted to shareholders of Obu Cement.
BUA has also announced that the Sokoto Kalambaina II cement plant which it started constructing in 2018 at a cost of $450 million will be completed in the second half of 2020. The plant is expected to have an annual capacity of 3Mtpa. With the consolidation and addition of the Sokoto Kalambaina II plant, BUA Cement’s total installed capacity across all its cement holdings will be 11Mtpa.
Abdulsamad Rabiu said this consolidation will strengthen BUA’s position as the second largest cement producer in Nigeria and position it to take advantage of the combined synergies to effectively serve Northern and Southern Nigeria based on the strategic locations of these plants – as well as a sizeable export market.
Abdulsamad Rabiu, Nigeria’s third richest man, is worth an estimated $1.4 billion according to FORBES. He is the founder of BUA Group, a Nigerian conglomerate active in cement production, sugar refining and real estate.