Simba Cement gets approval to acquire Cemtech business

The Competition Authority of Kenya (CAK) has approved the acquisition of Cemtech Company Limited by Simba Cement Company Limited.

“CAK considered that Cemtech has been dormant for a decade. Its shareholders have been looking a strategic partner to finance construction of a cement plant. The proposed acquisition is therefore expected to resuscitate the dormant firm, create jobs and raise the economic profile of West Pokot County” said the CAK in a press statement.

The Devki Group of Companies owns Simba Cement Limited (Simba Cement). Simba Cement trades under the brand name National Cement while Cemtech Limited, is a subsidiary of Sanghi Group of India. Sanghi Group is one of the world’s largest cement manufacturers.

The proposed transaction involves the acquisition of 100 per cent of the business and assets of Cemtech by Simba Cement. The assets include land, business intellectual property, business records, equipment, goodwill, licenses, stock and third party rights.

According to CAK, there will be no change in the market share of the merged entity since Cemtech has not yet commenced operations. The authority says that the merged entity will have a market share of 8 per cent.

“The transaction is unlikely to raise negative competition or public interest concerns, the Authority approved the proposed acquisition of Cemtech Company Limited by Simba Cement Company Limited,” it said.

Data from the Kenya National Bureau of Statistics (KNBS) indicates that the market players in Kenya’s cement sector, and their respective market shares are: Bamburi Cement Limited (33 per cent); Mombasa Cement Limited (16 per cent); East African Portland Cement Company (15 per cent); Savannah Cement (15 per cent); National Cement (8 per cent); and Athi River Mining Africa Limited (13 per cent).

KNBS data indicates that cement production decreased by 8.2 per cent from 6.7 Million tonnes in 2016 to 6.2 Million tonnes in 2017. Similarly, cement consumption and stocks declined from 6.3 Million tonnes in 2016 to 5.8 million tonnes in 2017 owing to reduced demand in the construction sector.

These market dynamics, coupled with competitive players, have resulted in a decrease in cement prices over recent years. In 2018, the average price of a 50kg bag of cement was Sh605 from an average of Sh687 two years ago.