Biggest South Africa Cement Firm Mulls Sale of Zimbabwe Unit

(Bloomberg) -- PPC Ltd., South Africa’s largest cement maker, is considering selling its Zimbabwe business for about $200 million, according to people with knowledge of the matter. The shares surged.

Most Read from Bloomberg

• Meta Asks Many Managers to Get Back to Making Things or Leave

• Quake Toll Hits 4,000 in Turkey, Syria as Overseas Aid Flows

• Trump Charges in Georgia Over 2020 Could Lead to Bigger Fed Case

• Powell Says Further Rate Hikes Needed and Markets Take Heed

• Wall Street Goes Risk-On Without Powell’s Pushback: Markets Wrap

A sale will help the company, founded in 1892, focus on its South African operations, said the people, who asked not to be identified because discussions are at an early stage. Pricing negotiations are ongoing, and there is no guarantee that a deal will go ahead, they said. PPC’s shares surged as much as 24% in Johannesburg, taking the company’s market value to 4.8 billion rand ($274 million).

Should the sale materialize, the proceeds “would be a significant inflow that can be used to either pay down debt or invest for future growth,” Lester Davids, an analyst with Unum Capital Ltd., said by email.

The company had 1.5 billion rand of debt as of September and is positioning itself for new road construction orders from South Africa’s highways agency. Meanwhile, some overseas investors are exiting Zimbabwe as it grapples with a currency crisis and the world’s highest inflation rate. Holcim Ltd. sold its business in the southern African nation last year to a local firm. US sanctions on many of the nation’s politicians and business people also stymie investments.

The PPC unit in Zimbabwe has attracted interest from a local company involved in road and home building, the people said.

PPC manages to conduct about 80% of its Zimbabwe sales in US dollars, driven by demand for its products in mining, residential construction and government-funded infrastructure projects, according to the company’s trading statement.

Demand for the building material is expected to expand to 1.6 million tons this year, an increase of about 60% from 2017, according to PPC.

--With assistance from Khuleko Siwele.

(Adding analyst comment in sixth paragraph)

Most Read from Bloomberg Businessweek

• Lab-Grown Meat Has a Bigger Problem Than the Lab

• That Zoom Meeting Really Could Have Been a Simple Phone Call

• Why Companies Are Setting Prices Wrong, and How to Do It Right

• ChatGPT Gets an MBA

• When Financial Bubbles Are Hard to Pop

©2023 Bloomberg L.P.