Simba Cement company Ltd is set to acquire Cemtech Ltd, following approvals by the Competition Authority of Kenya (CAK).
Simba, a subsidiary of Devki Group of Companies will acquire 100 percent of the business and assets of Cemtech owned by Indian Sanghi Group.
The amount involved in the transaction is yet to be revealed.
“We are still negotiating with Cemtech and we hope to close the deal soon. We are eager to venture into West Pokot to change its perception and the lives of its people for the better,” said Narendra Raval, founder and chairman of Devki Group.
The merger will push Simba’s market share to eight percent.
Cemtech, which has been dormant for sometime now targets to sell its cement locally as well as in Uganda and South Sudan.
The company (Cemtech) has has rights to limestone and clay deposits in West Pokot County.
“The Authority 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 CAK as quoted by a local daily.
This comes at a time when cement uptake has dipped to 5.49 million tonnes in 2018 from 5.78 million tonnes in 2017 according to the Kenya National Bureau of Statistics (KNBS) has announced.
This is the second year in a row the uptake of cement is dropping, pointing to a reduced uptake of real estate which is the main consumer of the commodity.
This has forced manufacturers to slash production by 8.6 percent to 5.63 million tonnes from 6.7 million tonnes in 2016.
Among the most hard hit by the dip is Bamburi Cement, which has already issued a profit warning for the second year in a row.
Another manufacturer, Athi River Mining Company (ARM), has also felt the blow and was placed under administration due to piling debt and losses. 700 employees were also shown the door in 2017 in operating cost reduction measures.
East African Portland Cement Company (EAPC) has also issued a profit warning even as experts predict a worsening state in 2019.