The billionaire businessman who founded the Devki Group of Companies has said the transaction will help position his company as the leading cement manufacturer in the region.
“The industry is poised for growth and we are excited about the prospects for this next chapter of our business. We will endeavour to safeguard the interests of all stakeholders including the employees, customers and suppliers in the overall interest of Kenya,” said Raval on Wednesday.
Mr. Raval added that the deal will be financed through a combination of debt and internally generated cash. Raval’s announcement now puts to rest speculations that widely circulated last year linking Aliko Dangote, Africa’s richest man, to the takeover of the struggling firm.
In 2018, in an interview with Bloomberg News Dangote revealed that he was eyeing a troubled company in Kenya suspected to be ARM.
“There is a company which … has operations in Tanzania, Kenya and Rwanda and we are talking to that company to see if we can take it over,” Mr Dangote said without naming the acquisition target.
ARM administrators, PricewaterhouseCoopers (PwC), said National Cement presented the best bid for the business, having met the set criteria consisting of offer price, deal certainty (proof of funds) and terms and conditions.
Raval bid was more attractive than Dangote's because he set his eyes first on the Kenyan plant unlike Dangote who wanted the whole company.
George Weru, an executive with PwC and one of the administrators of ARM Cement, said while the initial plan was to sell the whole company at once but it became clear that piece-by-piece transactions were the most optimal way to go.
“The signing of (deal) marks an important moment for the delivery of our mandate …to realise value for the creditors, ensure continuity for the business and its suppliers and in the process safeguard the jobs of its employees through a going concern sale.” He was quoted saying by Construction Kenya.
The deal will see National Cement Company Limited, a wholly-owned subsidiary of the Devki Group, acquire all cement and non-cement assets and business of ARM Cement PLC in Kenya.
Meanwhile, the sale of ARM’s Tanzania and Ugandan subsidiaries is under way.
“Sale of Tanzania business could be completed in one to two months. There are bidders already. The Tanzanian subsidiary has a bigger operation and is expected to fetch a higher price than the Kenyan business,” said Mr Weru.
Mr. Raval’s Devki Group of Companies has a regional presence with companies manufacturing cement, steel products, and roofing sheets. Companies under the Devki Group conglomerate include Devki Steel Mills Limited, National Cement Company Limited Uganda, Maisha Mabati Mills Limited and Northwood Aviation Limited.
Mr. Raval owns a cement grinding plant in Lukenya (Machakos County) and a clinkering plant at Simba town in Kajiado County.
ARM, which has operations in Kenya, Tanzania and Rwanda, was placed under administration on August 17 last year for failing to meet its creditor obligations.
It was founded in 1974 by the late family patriarch Harjivandas J Paunrana, and has been the flagship business of the wealthy Paunrana family.