Game-Changer in Cement Industry: Chinese Giant to Shake Up Nigeria’s Market with $1.6 Billion Lafarge Deal

By Achimi muktar

In a groundbreaking move that could redefine Nigeria’s cement industry, Chinese conglomerate Huaxin Cement Company has finalized an agreement to acquire an 83% stake in Lafarge Africa from Holcim Group. The deal, reportedly valued at $838.8 million, sets Lafarge Africa’s total worth at an impressive $1.6 billion, making it one of the most valuable companies listed on the Nigerian Exchange Limited.

This acquisition is poised to shake up the market, introducing cutting-edge technology and competitive pricing strategies that could rival dominant players like Dangote Cement and BUA Cement.

The Numbers Behind the Deal

Huaxin’s valuation of Lafarge Africa is based on the company's robust production capacity of 10.6 million tonnes annually, with cement prices in Nigeria currently ranging between $100 and $150 per tonne. Using Lafarge’s 2023 EBITDA of $151 million, Huaxin estimated the enterprise value at $1.057 billion by applying a multiple of seven.

Additionally, the replacement value of Lafarge Africa’s assets was pegged at $1.2 billion to $1.4 billion, further highlighting the strategic significance of this acquisition for Huaxin’s global expansion plans.

What This Means for Nigeria’s Cement Market

Industry insiders speculate that Huaxin’s entry will disrupt Nigeria’s cement market with its innovative pricing model and advanced industrial technology. The firm aims to undercut soaring local cement prices, currently at N7,500 to N8,000 per 50kg bag, which have driven up construction costs nationwide.

This marks a significant shift in Nigeria’s cement landscape, which has historically been dominated by Indian and African giants like Dangote and BUA. Experts predict Huaxin’s presence could lead to a price crash, offering much-needed relief to the construction industry and boosting infrastructural development.

Market Reactions and Future Outlook

Since the deal’s announcement on December 1, 2024, Lafarge Africa’s stock has surged by 21%, reaching N70.15 as of December 3, 2024. Analysts attribute this growth to investor confidence in Huaxin’s ability to revolutionize the market through technological integration and strategic pricing.

Huaxin Cement has positioned this acquisition as part of its broader overseas expansion strategy, aiming to leverage its expertise in production chain integration and industrial efficiency. The move also addresses challenges in China’s domestic market, which has faced stagnation due to regulatory shutdowns.

The Dawn of a New Era?

Huaxin’s deal represents a pivotal moment for Nigeria’s cement industry, with the potential to challenge existing market leaders and reshape consumer expectations. If successful, this acquisition could herald an era of affordable cement prices, improved competition, and accelerated infrastructural growth in Africa’s largest economy.

Stay tuned as we follow the ripple effects of this historic deal.