Billionaire investor Baloobhai Patel doubled his stake in Bamburi Cement ahead of the announcement of the company’s buyout, augmenting his expected gains from the proposed transaction.
Shareholder filings as at June 30, 2024 show that Mr Patel’s stake in the cement firm rose to 30.52 million shares, equivalent to 8.41 percent of the company’s issued shares. This is an increase from 14.96 million shares or 4.12 percent that the company’s latest annual report shows he held at the end of December 2023.
He owns the stake through his holding company Aksaya Investment Holdings Limited, making him the largest individual shareholder in Bamburi. Swiss multinational Holcim is the majority owner of the company with a 58.6 percent stake, followed by a nominee account domiciled at Standard Chartered that holds a 15.68 percent stake in the cement firm.
The updated shareholder data was published by Amsons Group, the Tanzanian conglomerate that is seeking to acquire a 100 percent stake in Bamburi for Sh23.6 billion.
At the end of December 2023, Mr Patel’s Bamburi shares were valued at Sh536.2 million, going by the share price of Sh35.85 at the time. The present stake is now valued at Sh1.88 billion on account of the additional shares he acquired, and a 71.6 percent appreciation in share price to Sh61.50 in the year-to-date. Since the deal was announced on July 10, the Bamburi stock has gained 36.7 percent, rising from Sh45 per share.
Trading data at the Nairobi Securities Exchange (NSE) shows that between January and June, there were three sessions with large block trades on the Bamburi stock, pointing to potential market acquisitions by Mr Patel.
The block trades done in January, February and June saw investors move 9.13 million shares at an average price of Sh38 per share, accounting for 66 percent of the total volume of 13.8 million Bamburi shares traded in the first half of the year.
Before the 2024 shares acquisition, Bamburi’s annual reports show that Mr Patel had last expanded his stake in 2021, when he acquired 7.93 million shares to add to the 7.03 million he already held, taking his ownership to 14.96 million units.
However, a separate document on the cement manufacturer’s website shows that he had already raised his stake to 20.8 million shares by the end of December 2023, suggesting that he made some purchases of 5.8 million shares last year.
Amsons last week offered to buy out Bamburi shareholders at a price of Sh65 per share, valuing the deal at Sh23.6 billion, which represents a premium of 85.7 percent on the average price of Sh35 that the Bamburi shares traded in between January 9 and July 9, 2024. At the offer price, Mr Patel stands to bank Sh1.98 billion for his shares in the cement company should the deal go through, while Holcim Group stands to take home Sh13.83 billion.
Amsons said last week that it had received irrevocable undertakings of share sales from Holcim, which holds its Bamburi stake through two investment vehicles – Fincem Holding Limited and Kencem Holding Limited — that each carry an equal stake of 29.3 percent.
The deal could see Bamburi, one of Kenya’s iconic blue-chip companies, delisted from the NSE, with Amsons saying that it will evaluate the efficacy of continued listing before making a decision. As per Kenya’s capital markets rules, Amsons will need to acquire at least 75 percent of Bamburi in order to delist it, while an acquisition of over 90 percent would allow it to compulsorily buy out dissenting minority shareholders.
The parties have also agreed to insert a break fee in the deal, which will see Amsons pay Bamburi shareholders who have consented to the offer $5.31 million (Sh688 million) —about three percent of the total consideration offered— if it walks away from the deal for reasons other than legal hitches.
The break fee will become payable if the deal has not been concluded by the end of November 28, 2025.
In mergers and acquisitions, a break fee is a penalty that is paid by one of the parties who backs out of a deal or agreement, and is usually put in place to discourage either party from backing out of the deal once firm agreements have been negotiated.
