The total return on the Bamburi Cement stock since the beginning of the year has climbed to 182 percent after the company declared a special dividend of Sh18.75 per share to add to capital gains accruing following the announcement of rival takeover bids.
The share price opened the year at Sh35.85, but has since then more than doubled to a near five-year high of Sh77.25, giving investors a capital gain of 115.5 percent so far.
In April, Bamburi announced a first and final dividend of Sh5.47 per share (for the financial year ended December 2023), which was paid to shareholders on July 25.
The cement maker followed up this cash distribution with last week’s special dividend, which is to be paid from the proceeds of the $84 million (Sh10.85 billion) sale of its 70 percent stake in Uganda’s Hima Cement earlier this year. The final and special dividends totalling Sh23.72 per share represent a yield of 66 percent on the stock’s opening price at the start of the year.
The gains have helped long-term investors who bought into the company at recent peaks of Sh190 to Sh200 eight years ago recoup some of the capital losses they suffered when the share price fell to a low of Sh22 just under a year ago.
The recent price rally started in mid-November 2023 when Bamburi first disclosed that it was to sell the Hima Cement stake and that it would consider issuing a special dividend following completion of the transaction.
Its share price rose to Sh41.80 by mid-December 2023 from Sh22.50 before the disclosure, as investors took a position on the stock with an eye on the potential special cash distribution down the road.
A second price rally materialised from July 10 when Tanzanian conglomerate Amsons Group announced that it was eyeing a full takeover of Bamburi by offering shareholders a price of Sh65 per share which valued the company at Sh23.6 billion.
The Bamburi share price rose to Sh57.75 on July 11 from Sh45 a day earlier on account of the Amsons disclosure, with demand being driven by investors seeking a position in the company to take advantage of the premium offered by the Tanzanian firm.
Sellers were also demanding a premium to sell the share on the Nairobi Securities Exchange (NSE) in light of the potential future gains they would be leaving on the table by divesting from the company at that stage.
On August 28, 2024 Bamburi shareholders received a competing offer from Kenyan firm Savannah Clinker Limited, which placed a higher bid of Sh70 per share or an aggregate of Sh25.41 billion seeking to buy 100 percent of the cement maker.
The offer by Savannah Clinker triggered a fresh price increase on the Bamburi stock, which gained nine percent or Sh5.50 on August 29 to hit Sh70, matching the offer price put on the table.
A further price increase was seen on Friday following the announcement of the special dividend, with the stock adding Sh7.50 or 11 percent to the previous day’s price to close the week at Sh77.50 a unit.
