Kenyan lawmakers have taken a strong stance against a proposed sale of shares in East African Portland Cement (EAPC), demanding instead that the company implement a share buyback to protect local investor value. The intervention follows controversy over a plan by a Tanzanian tycoon to acquire a major stake in the cement maker at what critics describe as deeply undervalued terms.
The deal under scrutiny involves Edhah Abdallah Munif, a prominent Tanzanian industrialist, seeking to purchase the 29.2 per cent stake in EAPC currently held by Swiss multinational Holcim. Under the proposal, Munif’s firm Kalahari Cement would pay approximately KSh 27.30 per share. According to reports, that price is less than half of EAPC’s market valuation, which stood near KSh 56–58.50 per share on the Nairobi Securities Exchange.
Parliament’s Trade, Industry and Cooperatives Committee has challenged the wisdom of the deal, arguing that it amounts to a fire-sale of a strategic national asset. Concerns cited include undervaluation, possible insider dealing, the erosion of Kenyan shareholding, and the risk of foreign control.
EAPC’s audited financials as of June 2024 place its net asset (book) value at KSh 20.4 billion. The company’s total assets are valued around KSh 35.19 billion, against liabilities of KSh 14.79 billion, with investment properties; principally large land holdings worth KSh 21.23 billion. These land assets contribute significantly to the concerns over undervaluation in the proposed transaction.
Lawmakers assert that, at the proposed share price, Munif would gain control of a strategic asset for significantly below both market and book value, depriving Kenyan shareholders, including pension funds, state holdings, and private investors of fair value. Critics point out that the state and the National Social Security Fund together hold over 50 per cent of EAPC.
In response, MPs are urging EAPC to consider a share buyback option, whereby the company itself would purchase shares at market value rather than allowing their sale to an outside investor at a steep discount. Kajiado South MP Samuell Parashina put it plainly: “Why sell our company for a song when the market clearly values it higher?”
EAPC’s Managing Director, Mohammed Osman, told the parliamentary committee that the company “has the capacity to buy back the shares … we have the cash flow to settle the amount because we have turned around the company.” However, he acknowledged any buyback plan would require approval from regulators, notably the Capital Markets Authority (CMA).
Regulatory bodies such as the CMA have been asked whether they have a role to play in ensuring fairness of such major transactions. The CMA has reportedly said it lacks the mandate to dictate the price between private parties. Meanwhile, the Competition Authority of Kenya has been asked to examine the deal under the lens of strategic asset protection.
Beyond mere share‐price concerns, the transaction raises broader questions about ownership of strategic national assets, foreign control, and whether Kenya’s legal and regulatory framework sufficiently protects local investors, especially pensioners from undervalued or opaque transactions.
The EAPC share price has also been among the top performers on the Nairobi Securities Exchange: it has soared over the past year, gaining several hundred percent, which further fuels concerns that the discounted deal would amount to a loss for local stakeholders.
Parliament’s committee has directed EAPC to explore the buyback option and urged a halt to the proposed sale until a fair valuation is ensured. Whether Holcim, which wishes to exit many of its Sub-Saharan operations, will reopen talks or accept a counterproposal remains unclear.
Do you have any story or press releases you want to share? Send tips to editor@envestreetfinancial.com
Follow us on Twitter, Facebook, or LinkedIn to ensure you don’t miss out on any