Chinese Firm Buys Maweni Limestone for Sh12bn

Chinese building materials manufacturer Huaxin Cement Company has acquired ARM Cement’s Tanzania subsidiary, Maweni Limestone Ltd., for $116 million (Sh11.95 billion).

According to joint ARM administrators from PwC Kenya, the acquisition of the Tanzanian maker of the Rhino Cement brand will allow the Chinese company instant access to the regional cement market.

“This transaction will permit Huaxin immediate entry into one of the leading markets in East Africa and is integral to Huaxin’s broader strategy to expand its footprint across emerging markets,” the administrators said on Thursday.

Huaxin Cement, which majors in the production of cement and concretes, originally placed a Sh11.8 billion bid for Maweni Limestone before enhancing the offer to Sh11.95 billion.

The deal, which is subject to regulatory approvals among other conditions effectively means that ARM Cement administrators are now set to receive close to Sh17 billion for the sale of the company’s assets in Kenya and Tanzania.

On Thursday, the High Court approved the sale of ARM Kenya to National Cement Company for Sh5 billion. The transaction had been stopped by the court pending the determination of a case filed by the Rai Group, which claimed it had offered to buy the business for Sh6.5 billion.

RELATED: How Devki Beat Dangote in Battle for ARM Cement Assets

The company was asked to deposit a Sh1.3 billion guarantee by September 10 as a condition for a continued freeze on the sale to National Cement.

However, PwC declined to accept the guarantee saying the surety failed to meet its terms.

ARM, once Kenya’s second-largest cement maker, has seen its market share drop below 10 percent after the clinker plant it built in Tanzania in 2014 failed to make money.

The 1.2 million metric tonne annual capacity plant in the northeast Tanzanian port of Tanga was badly hit by power rationing, insufficient coal supply and competition from the likes of Dangote Cement.

As a consequence, Maweni Limestone defaulted on its loans totaling Sh21.5 billion – which were advanced to the company by ARM Cement Kenya.

In November 2018, PwC administrators wrote off the bad loans in a move that slashed ARM Cement’s assets by 61 per cent and took it to a negative equity position of Sh2.4 billion.

Join 15,000+ pros getting our weekly digest of news and insights.