Bamburi Cement is set to sell its 70 percent stake in its Ugandan subsidiary Hima Cement for $84 million (Sh12.7 billion), a move that will boost its cash flows.
Hima Cement’s minority shareholder Cementia Holding AG is also joining its sister company Bamburi to sell its 30 percent stake for $36 million (Sh5.4 billion) to a consortium of Sarrai Group and Rwimi Holdings, that will fully own the cement manufacturer.
Bamburi’s share price gained 11 percent on Wednesday on the announcement of the news to close at Sh25, rising from the 52-week low of Sh21.3 set on October 31.
“Upon completion of the proposed transaction … Sarrai Group Limited and Rwimi Holdings Limited will, together, legally and beneficially own 100 percent of the issued share capital of Hima Cement Limited and Hima Cement Limited (and all its subsidiaries, including Hima Cement Rwanda Limited) will cease to be a member of the Bamburi Group and will become a member of the Sarrai Group,” Bamburi said in a notice.
The Nairobi Securities Exchange-listed firm said the total deal value of $120 million (Sh18.2 billion) is subject to adjustments, that will be made at or after completion of the transaction.
The deal is part of a strategy by Bamburi’s parent firm Holcim to divest from fragmented markets and concentrate in countries where it is among the biggest players. The multinational is simultaneously selling its 65 percent stake in its Tanzanian subsidiary Mbeya Cement Company to Amsons Group for an undisclosed sum.
“These divestments advance our strategy to consolidate our leadership in core markets as the global leader in innovative and sustainable building solutions,” Martin Kriegner, Holcim’s Regional Head of Asia, Middle East & Africa said in a statement.
“With the Sarrai Group and Amsons Group, we are pleased to have found strategic and trusted partners who are best positioned to develop these businesses in the long term.”
For Bamburi, the sale of Hima Cement will unlock capital and enable it to focus on the Kenyan business which has been relatively more profitable. The company made a net profit of Sh258 million in the year ended December 2022 in Kenya where it reported revenue of Sh20.5 billion.
Uganda meanwhile had closely comparable sales of Sh18.4 billion but posted a net loss of Sh77 million in the same period.
On a consolidated basis, the group recorded a net income of Sh181 million, indicating that Ugandan operations were weighing down earnings.
Currently, Bamburi’s principal activities in Kenya and Uganda are the manufacture and sale of cement which comprises over 95 percent of its business.