Senate Approves $1 Billion Lafarge Africa Acquisition by Chinese Firm

Senate Backs $1 Billion Lafarge Africa Acquisition by Chinese Firm
Nigerian investors’ 16.19 per cent stake remains unaffected by transaction.
Senate demanded strict regulatory oversight throughout the ownership transition.

The Senate has endorsed the proposed $1 billion acquisition of Lafarge Africa Plc by Hainan Huaxin Pan-African Investment Company Plc, a Chinese-owned investment firm, stating that the transaction will not affect the 16.19 per cent equity held by Nigerian investors in the cement manufacturer.

The upper chamber approved the proposed acquisition during Thursday’s plenary after considering and adopting the report of its ad hoc committee chaired by the Senate Minority Leader, Senator Abba Moro.

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EKO HOT BLOG reports that the committee was established about seven months ago to investigate Holcim AG’s proposed divestment from Lafarge Africa amid concerns over the company’s ownership structure, regulatory compliance and the potential impact of the transaction on Nigeria’s economy.

Presenting the committee’s report, Moro said extensive consultations were held with relevant government agencies, regulators and other stakeholders, adding that the investigation found no legal impediment to the acquisition.

According to him, the committee recommended that the transaction should proceed, provided all parties comply fully with Nigerian laws and remain subject to regulatory oversight.

“The Senate allowed the transaction process concerning the sale of Lafarge Cement Company Plc to Huaxin to scale through.

“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,” Moro said.

### Senate Calls for Strict Regulatory Oversight

The committee urged regulatory agencies to closely monitor every stage of the acquisition to ensure compliance with Nigeria’s corporate, investment and competition laws.

The agencies identified include the Securities and Exchange Commission (SEC), the Corporate Affairs Commission (CAC), the Federal Competition and Consumer Protection Commission (FCCPC), the Nigerian Investment Promotion Commission (NIPC), and the Bureau of Public Enterprises (BPE).

Lawmakers also urged the incoming investors to strengthen Lafarge Africa’s corporate social responsibility initiatives, particularly in host communities where the company operates.

According to the committee, public concerns surrounding the transaction largely stemmed from the mistaken belief that Lafarge Africa is wholly owned by Nigerian interests.

It explained that the proposed deal is essentially the transfer of ownership from one foreign investor to another, with Holcim, the company’s majority shareholder, selling its stake to Huaxin.

The report stated that the acquisition would not reduce or alter the rights of Nigerian shareholders, noting that the 16.19 per cent equity held by the Federal Government and other Nigerian investors would remain unchanged.

The committee further said regulatory agencies involved in the review found no evidence that the proposed acquisition contravenes Nigeria’s legal or regulatory framework.

It also noted that there was no indication the transaction posed any immediate threat to national security or the country’s economic interests.

According to the report, Huaxin has committed to injecting fresh capital into Lafarge Africa’s operations in Nigeria and other African markets.

The committee said the investment is expected to enhance the company’s operations, stimulate industrial growth and encourage increased foreign direct investment into Nigeria.

It added that Lafarge Africa currently controls about 18 per cent of Nigeria’s cement market and that the acquisition is not expected to significantly affect competition within the sector.

The committee also disclosed that the FCCPC received assurances from Huaxin that no employees would lose their jobs during the ownership transition.

### Ningi Raises Questions Over Shareholding Structure

During deliberations, Senator Abdul Ningi, representing Bauchi Central, questioned the ownership structure presented in the committee’s report.

He argued that while the report stated Nigerian interests held about 16 per cent of Lafarge Africa and another 18 per cent was attributed to Lafarge or Holcim, it did not explain the ownership of the remaining 66 per cent.

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

“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 said.

The senator also maintained that the proposed acquisition did not involve the sale of a strategic Nigerian asset but rather the transfer of shares between two foreign companies.

“There is a misconception about the ownership of Lafarge.

Senate Approves $1 Billion Lafarge Africa Acquisition by Chinese Firm

“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,” he added.

### Senate Adopts Committee Report

Senators, including the Chairman of the Senate Committee on Capital Market, Osita Izunaso, and Senator Shuaib Salisu, representing Ogun Central, supported the committee’s recommendations.

Following the debate, the Senate adopted the report, giving legislative backing to the proposed acquisition.

The endorsement comes months after the Senate Committee on Capital Market commenced an investigation into Holcim Group’s planned divestment of its 83.81 per cent stake in Lafarge Africa.

During the investigation, the SEC informed lawmakers that it had not received a formal application relating to the proposed sale, explaining that it had only been notified of what was described as an internal restructuring within the Holcim Group.

The Bureau of Public Enterprises also told lawmakers that the shares being sold belonged to Holcim and that the transaction would not affect the 16.19 per cent equity held by Nigerian investors.

As part of its review, the Senate committee subsequently invited Lafarge Africa’s management and requested additional information from the Corporate Affairs Commission before concluding its findings.