One key take-away in 2014 is that Nigerian manufacturers have shown great interest in mergers and acquisitions to expand operations and gain substantial share in both local and international markets. Like typical business owners, they aim at increased profits, capacity and output, as well as reduced inventory.

Lafarge and Holcim, two world’s largest cement makers, have already got a nod on their proposed merger as the European Commission clears both firms for the process. Both companies have now finalised the list of assets for divestment in Europe, with a very slight change in France. The positive impact of this merger will be enormous in terms of capacity utilisation, market share and profits, say stakeholders.

“With this decision (EU’s), we remain firmly on track for a closing in the first half of 2015,” said Wolfgang Reitzle, designated chairman of the board of directors, and Bruno Lafont, designated CEO of the future combined company.

The joint statement by both firms says that following constructive discussions with the EU in the pre-notification period and throughout its Phase 1 investigation, Holcim and Lafarge have finalised the list of assets for divestment in Europe.

It further says that both companies will continue to actively pursue negotiations for the sale of assets with potential buyers, who will have to be pre-approved by the European Commission.

Lafarge-Holcim merger is critical for the Nigerian economy, according to analysts. First, Lafarge Africa, part of the global Lafarge, is the second largest cement maker in the country after Dangote Cement (which is the largest in terms of output). Second, Lafarge Africa is a recent combination of Lafarge’s Nigerian and South African businesses. With the combination, the firm will likely unveil many more solutions in the Nigerian market. Already, there are indications that its new solution known as OneCem will be introduced into the country this year. OneCem is a low density cement product for the oil and gas sector, which naturally needs more complex solutions.

The Nigerian Breweries (NB) plc, largest brewer in the country, has also announced the conclusion of its merger with Consolidated Breweries plc. A statement by the company in Lagos said the merger was effective from December 31.

“Nigerian Breweries plc has formally informed the Nigerian Stock Exchange (NSE) of conclusion of merger process as required by the listing regulations,” Nicolaas Vervelde, managing director, NB, said in the statement.

It also said that the name of the enlarged company arising from the merger would be Nigerian Breweries plc and that the company would remain quoted on the NSE.

“With the conclusion of the merger, the enlarged NB is now enabled to fully capitalise on the opportunities of the Nigerian beer and malt drinks market and create significant value through delivery of broader product offering, operational efficiencies and access to new markets.

“The merger is also expected to deliver a number of benefits for its stakeholders including shareholders, employees, consumers, trading partners, suppliers and the Nigerian economy as a whole,” the statement further said.

Consolidated Breweries has two plants in Ota, Ogun State and Awommama in Imo State.

Analysts generally believe that the new combined entity will have a wider product portfolio covering all the major beer segments, especially value brands. NB’s market share is estimated at around 63 percent of the market, while Consolidated Breweries’ is put at between 6 and 7 percent. The combined entity is, therefore, expected to have a commanding market share of about 70 percent of the Nigerian beer market.

There have been major mergers/acquisitions in the manufacturing sector. Mergers/acquisitions in Unilever Nigeria plc brought in Lipton Nigeria Limited in 1985, as well as Cheesebrough Ponds Industries Limited in 1988.

SABMiller, Coca-Cola and the South African Gutsche family have also agreed to combine their non-alcoholic bottling operations in Africa, a $2.3 billion deal long rumoured to be in the offing.

The new combined bottler, Coca-Cola Beverages Africa, will operate in 12 countries that account for about 40 percent of all of Coca-Cola’s volumes in Africa. While SABMiller operates in Nigeria through International Breweries and Pabod Breweries, Nigerian Bottling Company holds Coca-Cola’s franchise in the country.