It was time relevant authorities intervened and oversee a speedy conclusion of the deal and lead the parties through a hassle-free execution of the functional terms of the take-over pact.
In essence Scancem International (DA) will take-over Tanga Cement as a going concern, this means no company will be closed, production will not stop, workers emoluments will not be disturbed, what will take place is an improvement to adapt to the new arrangements.
Soon after the titanic transaction was proposed, there emerged opposition and opinions on grounds that it could engineer a market monopoly that could hold back fair competition, claims that has so far been deactivated by minister for Investment, Industry and Trade Dr. Ashatu Kijaji and established by authorities to be weightless.
The takeover impasse props up at a time when globally, takeovers are celebrated as companies unite to create bigger entities as they strive to enjoy economies of scale and capitalize on the marginal increase in profit, reinvesting it in crucial areas like Research and Development, as well as modern and improved technology.
The delay of the deal could have far-reaching ramifications, as it could lead to disruption of supply chain contracts, reduction in brand trust.
The mammoth deal was jointly declared on October 2021 by Scancem International DA (Scancem), a subsidiary of Heidelberg Cement AG, which owns Tanzania Portland Cement (Twiga Cement), and AfriSam Mauritius Investment Holdings Limited, the owner of Tanga Cement PlC, that they had finalised the terms upon which the former would acquire 68.33 percent of shareholding in Tanga Cement.
The Sh137.33 billion megadeal had been under examination by the Fair Competition Commission (FCC), the Tanzania Mining Commission (TMC) and all other related authorities in the industry, after claims it would amount to breach Tanzania’s competition laws, but ultimately sailed through.
According to the data, the total cement production volume in Tanzania is approximately 11.16m metric tons.
Analysis reveals that the combined annual production volume of the new entity to be formed by the takeover cannot amount to or be above the 35 per cent market share threshold set by the Fair Competition Commission.
From the data, Twiga Cement plant churns out some 2.1m metric tons annually, presenting a reading of 19 percent market share.
On the other hand, Tanga Cement produces 1.2m metric tons yearly, enabling it to reign over 11 per cent of the market.
Accordingly, the combined output of the new entity resulting from the proposed takeover will amount to 30 per cent share of the market, which is 5 percent points below the 35-percent ceiling set by regulations, in effect reducing comments from naysayers to baseless cacophony.
Let me remind every stakeholder that takeovers are so common a form of legal business combination worldwide, honestly I can’t find any legitimate reasons to justify efforts of those who are now trying to block the practice here in Tanzania.
If we allow such opposition to succeed, we risk setting a precedent that can foster anti-business sentiments in the country, a situation that is not only unwelcomed but also totally unacceptable.
The writer is a business analyst based in Dar es Salaam
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