ARM Cement has signed an Sh5 billion deal for the transfer of its business to the National Cement Company.
This is after the Treasury approved the deal, now the national cement will acquire all the assets and business of ARM cement PLC in Kenya as a going concern (the “Transaction”) for a purchase price consideration of USD 50M (Sh5 billion).
The National Cement Company Ltd beat Oman’s Raysut Cement to secure the acquisition of Athi River Minning’s cement and non-cement assets in Kenya valued at Sh5 billion.
In December, the Oman-based firm had made an sh10.2 billion bid to acquire 70 percent of the struggling cement manufacturer as part of its expansion plans into the East and Central African markets.
A month earlier, Nigeria’s Dangote Cement was approached about a potential transaction by advisers to ARM Cement, a source with direct knowledge of the matter told Reuters at the time.
ARM Cement, once the country’s second-largest cement maker, has been unable to recover from losses which started in the first half of 2015 and owes about $190 million (Sh19 billion) to a range of creditors, including local commercial banks.
A source familiar with the development states that the Dangote offer wasn’t appealing and they had to look for a more approachable investor.
Because of the inability of the Company to meet its creditor obligations, ARM Cement was placed under administration on 17th August 2018 and its shares suspended from trading on the Nairobi Stock Exchange with effect from 20th August 2018.
National Cement is a manufacturer and distributor of cement in Kenya and is a subsidiary of the Devki Group with interests spanning steel products, roofing sheets, aviation, and cement.
From inception in 2010, National Cement has reported strong growth and established itself as one of the leading producers of cement in Kenya.
The company produces the “Simba Cement” brand. The Devki Group has 4,500 employees and has operations in Kenya and Uganda.
The Insolvency Act of 2015 gives companies going through financial turmoil an opportunity to put their act together, including settlement of debts.