Shares of cement company Lafarge Africa rose 10% to a three-week high on Thursday after the cement maker said it sold its loss-making South African operations.
Shares of the local Lagos-listed unit of Franco-Swiss group Lafarge Holcim climbed to 10.50 naira, outperforming the weaker Nigerian All Share Index which was down 0.02%.
Lafarge Africa late on Wednesday said it had sold its South African operations to an affiliate of its parent firm Lafarge Holcim for $317 million. The deal is expected to close by the third quarter.
“The South African entity has been the weakest link in Lafarge Africa‘s performance and the major driver of earnings volatility,” analysts at Renissance Capital wrote in a note.
“The conclusion of the proposal sale is expected to boost Lafarge Africa‘s cash-flow and net income … eliminate fully all foreign currency denominated debt.”
In 2014, Lafarge merged its publicly-traded Nigerian unit Lafarge Wapco with its South African business to create Lafarge Africa – valued at $1.35 billion at the time – to take on arch rival Dangote Cement.
However, the operations were hurt by tough competition and sluggish growth in South Africa, prompting a recapitalisation and losses for several years.
The deal leaves Lafarge Africa as a solely Nigerian business, analysts said.