The share price of cement maker PPC was up 5% during morning trade on Monday, after the company announced that it had entered formal discussions with AfriSam on a potential merger.
PPC shares were up 5% to R7.35 at 9.17 am.
In a statement on Monday, PPC CEO Darryll Castle said the company and AfriSam have concluded that current market circumstances warrant entering into formal discussions to consider a merger.
Castle said both companies would jointly assess the potential benefits of the proposed merger for all stakeholders, including the value that can be realised for shareholders.
A successful merger between the two cement companies would potentially create a major cement producer in the African continent that would be able to compete internationally. This is not the first time that PPC and AfriSam embarked on merging their operations, as nearly two years ago both companies abandoned their tie-up ambitions.
PPC and AfriSam have revived talks to potentially merge their operations, nearly two years after the cement makers abandoned the tie-up talks.
“Should the proposed merger proceed it will result in the creation of a South African-owned cement producer that is financially stronger, operationally more efficient, has deeper technical capability and is well placed to develop as a major African cement producer,” said Castle.
Cement makers have been battling with challenges of low infrastructure spend, tough competition, low cement prices and the dumping of cheap cement in the domestic market.
PPC will hold a press briefing at 12pm to reveal further details.