Oman’s Raysut Cement Seeks to Buy ARM for Sh10 Billion

Raysut Cement Company, Oman’s largest cement maker, has made an offer to buy ARM for Sh10.2 billion aiming to become a key player in the East African cement business.

The bid, if successful, will help the company to become a manufacturer of cement in Kenya, a shift from its present status of being a supplier of clinker to local cement makers.

The investment is part of Raysut’s plan to more than triple its overall production capacity to 20 million tonnes per annum, from the current six million tonnes per annum.

“The acquisition will complement Raysut’s revised strategy to manufacture clinker in proximity to the markets it supplies to in East Africa,” the multinational said on Tuesday.

Currently, Raysut supplies about 300,000 tonnes of clinker to Kenya and Tanzania every three months from its home plant at Salalah, Oman.

ARM, which was in August placed under the administration of PwC after failing to find a strategic investor to help it manage debts of 14.4 billion shillings, has operations in Kenya, Rwanda, and Tanzania – making it attractive to investors seeking to expand into the region.

In Kenya, ARM operates a clinker and cement grinding plant in Kaloleni and a cement grinding plant at Athi River. The company imports, manufactures, and sells cement in Rwanda through its entirely owned subsidiary Kigali Cement Company.

In Tanzania, ARM runs limestone, clinker and cement plants through its subsidiaries Maweni Limestone Limited and ARM Tanzania.

The company has reportedly approached Dangote Cement, which is owned by billionaire Aliko Dangote, for a potential buyout deal as it seeks to pay down its mounting pile of debt.

RELATED: Dangote Enters Talks to Acquire Troubled ARM Cement

Dangote has not decided on whether to proceed with the deal as the company is yet to conduct due diligence on ARM Cement, a knowledgeable source told Reuters last month.

Insiders at ARM told CK that Dangote Cement first expressed its interest in the local rival mid-last year and renewed its attention after the company was handed over to PwC.

Dangote, which has about a 45 percent market share in sub-Sahara Africa with an annual production capacity of 45 million tonnes, has long held interest in venturing into Kenya – with plans underway to build two cement factories by 2021.

Global cement giants are increasingly spending big fortunes in acquisitions and new projects to seize a share of the Pan African cement business which is foreseen to grow in coming years thanks to major private and public infrastructure projects in the region.

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