Mixed Reactions Trail Dangote Cement’s N135 Share Offer

Some analysts on the Nigerian Stock Exchange (NSE) on Wednesday, said market forces would force down the special sale of shares offer of N135 per share by Dangote Cement.

They said in separate interviews with The Tide source in Lagos, that the success of the stock depended on market forces.

Some of the analysts said the amount was justifiable, based on the prospects of the company.

Others said it might be a hard buy, based on the current challenges facing the Nigerian capital market.

 Reports said that the offer would be listed and made available to the investing public at the floor of the exchange on October 26.

If successful, it would constitute over 25 per cent of the entire market capitalisation of the NSE.

  The listing, being the final stage of the merger process between Dangote Cement and Benue Cement Company (BCC), is expected to lift the NSE’s market capitalisation by about N2.1 trillion.

After the listing, the shares of BCC would be de-listed from the Exchange.

Mr Afolabi Olajiga of IMTL Securities said that the company’s offer of N135 per share was accepted because “it has prospects”.

Olajiga said: “Dangote is in five countries. BCC has only one plant in Nigeria”.

“If the price is not good for the market, the Security Exchange Commission and Nigeria Stock Exchange would not approve it. Dangote Flour and Dangote Sugar are good to buy”.

“If the price is not okay, investors’ reaction and other market forces will tell on it and the price will be forced to drop”.

“The pricing of Dangote Cement at N135 as against BCC that was selling between N35 and N50 shows that Dangote Cement is more on the ground”.

Mr Habeeb Amole, a stockbroker with Cordros Capital Ltd., said that the capital market was driven by information.

According to him, it is the information that the company will present on the day of its listing that will convince the investors on whether or not to buy the stocks at the price.

He expressed the fear that the offer might be a hard sale considering the current situation in the capital market.

“Dangote Cement may be a hard sale considering what is happening in the market. I can attest to BCC; but let us wait and see after the listing for them to tell us what they are up to,” he said.

Mr Boniface Okezie, National Coordinator, Progressive Shareholders Association of Nigeria, queried the rational for pegging the share price at N135 per share.

“What does Dangote have to offer with the cement that BCC cannot offer?

“Why that high price, considering the stock price situations at the capital market. I don’t have to bother. I will wait until the price comes down,” Okezie said.

Another stockbroker, who pleaded anonymity, said that investors usually bought stocks based on the future outlook.

He said some stocks, including Dangote Cement’s should not be for short time investors, but for long time investors.

He said that the company must have arrived at the price based on the advice from the investment advisers.

Mr Nona Awo, an investment analyst, said that it would be too quick to condemn or approve the price when the company was yet to say the reason behind its listing.

He said that the best thing was to wait until after the listing when the company must have presented the facts behind their listing on the floor of the NSE.