West China Cement Issues Detailed Supplemental Announcement on AfriSam Holdings Acquisition

West China Cement Limited (Stock Code: 2233) has released a comprehensive supplemental announcement regarding its acquisition and share subscription in AfriSam Holdings Proprietary Limited. This follows the initial announcement dated April 2, 2026, and provides shareholders and investors with crucial insights on the valuation methodology and transaction rationale.

Key Points for Investors

• Valuation Approach: The company considered three approaches—cost, income, and market—but ultimately adopted the market approach for valuing AfriSam. The cost approach was dismissed as it does not capture the economic benefits of AfriSam’s assets, and the income approach was rejected due to AfriSam’s net losses in the past three years and the high uncertainty in forecasting future profits.
• Market Approach Details: The valuation was based on EV-to-EBITDA multiples from comparable recent transactions in Africa involving integrated cement producers. The selected benchmark is widely used in the cement industry and is considered most relevant given AfriSam’s operating profile.
• Comparable Transactions: Only two comparable transactions were found that met the strict criteria: the acquisition of Lafarge Africa PLC by Huaxin Cement (EV/EBITDA 8.1x, Dec 2024) and Bamburi Cement by Amsons Group (EV/EBITDA 7.1x, July 2024). The median multiple was 7.6x.
• Risk Adjustments: Several adjustments were made to the median multiple:
  • Negative adjustment of 10-15% for AfriSam’s lower EBITDA margins compared to peers.
  • Negative adjustment of 10% for operational and macroeconomic risks in South Africa, including electricity disruptions and rising energy costs.
  • Positive adjustment of 10% for currency liquidity risk, acknowledging South Africa’s relatively stable and liquid capital markets versus Nigeria and Kenya.

  The net adjustment applied was 13%, resulting in an EV/EBITDA multiple range of 6.2x to 7.1x.

• Capital Structure Impact: AfriSam’s enterprise value is significantly higher than its book value due to substantial long-term interest-bearing debt, an important factor for shareholders to consider when evaluating the transaction.
• Board Assessment: The Board, including independent non-executive directors, assessed the acquisition price and subscription consideration as fair, reasonable, and in the best interests of the company and its shareholders. The Board considered both the rationale and the detailed valuation process.
• Share Price Sensitivity: The acquisition and its detailed valuation process may impact share price due to:
  • The strategic expansion into the African cement market.
  • The robust, transparent valuation process and risk adjustments, showing prudent management.
  • Potential for future profitability if AfriSam’s operational risks are managed and its market position improves.

What Shareholders Must Know

• Transaction Terms: The acquisition price and subscription consideration were based on the adjusted EV/EBITDA multiples, reflecting AfriSam’s operational and financial risks.
• Recent Losses and High Debt: AfriSam has reported net losses for the past three years and carries significant debt, which introduces risks but also potential value creation if turnaround strategies succeed.
• Strategic Rationale: The acquisition is intended to expand West China Cement’s footprint in Africa, leveraging AfriSam’s assets and market presence.
• Board Confidence: The Board fully supports the transaction and sees it as beneficial for the company and its shareholders.

Board Statement

The directors, including independent non-executive directors, unanimously consider the terms of the transaction documents and the contemplated transactions as fair and reasonable, on normal commercial terms, and in the interests of the company and shareholders.

Potential Impact on Share Price

This transaction represents a significant strategic move for West China Cement. The acquisition’s transparency, rigorous valuation, and risk management may bolster investor confidence, potentially affecting share price positively if the market sees this as a prudent expansion. However, AfriSam’s recent financial losses and high debt levels pose risks that could weigh on valuations if operational improvements are not realized.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research and consult professional advisors before making investment decisions. The information is based on the supplemental announcement issued by West China Cement Limited, and actual outcomes may differ due to market and operational factors.

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