Scancern and said in a joint statement with AfriSam Mauritius Investment Holdings Limited, the owner of Tanga Cement in October last year that they have finalizing regulatory approvals to allow the former acquire 68.33 percent of the shareholding of the Tanga based cement maker.
The deal which is worth 137.33bn/- is currently being scrutinized by Fair Competition Commission (FCC) and the Tanzania Mining Commission (TMC). “We are worried with this takeover bid of a big company by another big company that may distort the market,” said Juma Hamis Mwinyi, a long term employee of the struggling Tanga Cement Plc.
Mwinyi said the Tanga-Twiga cement conglomerate will control a big share of the market that may lead to a monopoly. “Let’s wait and see what FCC will decide but it’s very worrying to many of us as employees,” he argued saying many long term serving veterans fear for their future.
But an analyst has argued that it is impossible for the acquisition to establish a monopoly because there are just too many producers and importers of cement. “When one looks at the possible production capacities of the new entity, is it foreseen that they will be able to produce about 3.3 million metric tons of cement per year. Comparing this to the published capacity of the newest entrant in the market, the Chinese Company Huaxin and Dangote Cement which have approximately 1.9 million and 3 million metric tons capacity each,” argued Ernest Massawe, a doctorate student at University of Dar es Salaam Business School when commenting on the deal.
Massawe pointed out that the country’s three biggest cement producers have a market share of 60 percent while the merged entity will only be able to supply 40 percent. “So, without even taking Mbeya, Nyati, Moshi, Lucky and Camel Cement, who have another 3.5 million metric tons capacity, the merged company may end up controlling slightly more than 28 percent of the market,” he argued.
No senior management employee was available for comment but a board member of the company said they cannot invest U$ 500 million in limestone quarry only. “We are investing this money to ensure that the new company will most likely be able to invest into building more production facilities, but definitely not less,” hinted.
But the majority of employees said that they wish the process is concluded soon by regulators so that they can be part of an international company like Heidelberg Cement. “Since Holcim’s withdrawal from Africa in 2008, it was not possible for us to be part factories outside of South Africa and Tanzania. We lost lots of development and secondment opportunities at all levels and the longer this takes, the more we lose,” said Ephraim Emmanuel, a shit leader at the Pongwe based company.
Emmanuel said the acquisition aligns well with President Samia Suluhu Hassan’s to attract foreign investment into the country to speed up economic growth. “We understand that the deal will bring about U$ 500 million into the country which is very good,” he argued saying shareholders including Tanzanians will get their share of it. “We as employees will get better remuneration because the company’s share price that will appreciate due to profitability,” he argued.
One of the distributors of Tanga Cement products, Maimuma Charles Hoza of Pongwe in Tanga said they are also excited and a bit for the transaction. “I think that cement will be much cheaper to buy because of competition that will result into efficiency,” Hoza said adding that other cement manufacturers should not fear the new company.
She said the company’s shares at Dar es Salaam Stock Exchange will also appreciate hence good news to local shareholders who have gone without dividend for many years due to loss making. “In my opinion, this deal should be speeded up,” Hoza added. Twiga and Tanga Cement are the only two cement companies listed on the DSE hence their merger will mean creation of the largest listed cement conglomerate at the bourse.