Members of parliament
are threatening to stop the proposed acquisition of East
Africa Portland Cement should the process fail to be done above board.
The parliamentary committee on trade, industry and cooperatives has raised questions
over the planned acquisition of EAPC shares by Kalahari Group, terming the
process opaque and potentially a “hostile takeover.”
This refers to a company acquiring another against the wishes of the target company's management and board.
During a heated
session chaired by Aldai MP and the committee's vice chairperson ,Maryanne
Keitany, MPs questioned why the company’s management, employees and the public
had not been adequately involved.
This is despite 52
per cent of EAPC being owned through the National Treasury and the
National Social Security Fund (NSSF).
“So, it is a very
pertinent question, because the majority of these 52 per cent represent also
the same staff and also these same staff have relatives, they have their own
livelihoods, that we must understand what plans are there,” said Keitany.
While pocking
holes on the proposed deal the committee sought to determine whether the
acquisition safeguards the interests of government, minority shareholders and
employees.
“Public
participation is critical, because this is not just any private company. The
people of Kenya, through their pensions and taxes, own a majority of this firm.
We must know if due diligence was done and if employees and local communities
were involved,” Keitany said.
EAPC managing director Mohamed Adan confirmed that neither management nor staff had been engaged on
the proposed transaction.
He noted that
uncertainty had created anxiety among employees about potential job losses and
changes in operations.
“As management, we
have not been approached, and there has been no visibility on due diligence.
Employees are understandably jittery, because livelihoods are at stake. Human
capital is key to our success, and any change of ownership will affect them,”
Adan told MPs.
Lawmakers further
pressed Adan on whether the company had the financial capacity to buy back the
shares itself instead of waiting for Kalahari’s takeover.
Funyula Member of
parliament Wilberforce Oundo questioned why EAPC couldn’t acquire the shares by
itself rather than letting an entity that has announced plans to exit the sub-Saharan
market take over.
“Why are you
planning to wait to buy the shares or buy back from Kalahari? Because Kalahari
is basically the one buying from Holcim, according to the proposed sale. So,
why are you waiting for them to buy, for you to buy from Kalahari?” paused
Oundo,
“Why don't you
just stand and say that we have the money, the money is available, and you are
capable to buy?”
Adan revealed that
share buyback was a possible option, given EAPC’s improved cash flow following
a turnaround strategy.
“A share buyback
could settle this matter once and for all, as it would increase the stake of
existing shareholders. However, no such option has been tabled for us,” he
said.
The committee
questioned whether the Competition Authority of Kenya (CAK) and the Capital
Markets Authority (CMA) had fulfilled their oversight roles, promising to
summon the regulators for further scrutiny.
“Where there is no
public participation, Parliament must step in to exercise its oversight duty.
This deal touches on taxpayers, employees, and local communities in quarrying
areas, and we cannot allow it to proceed in secrecy,” the committee warned.
The MPs further raised
concerns about governance gaps, particularly the appointment of the board
chair.
Keitany questioned
why the process appeared to rely on government nomination rather than the
company’s Memorandum and Articles of Association.
“You cannot run on
tradition. Appointments must be anchored in law. We want the memos, articles
and any State Corporations Act provisions governing this entity,” she demanded.
Adan admitted that
the company’s Articles of Association, last updated in 1933, were outdated and
inconsistent with current corporate governance laws, adding that EAPC would
move to reconcile them with the Companies Act and the State Corporations Act.
On privatisation,
the committee sought updates on government plans to list EAPC among parastatals
set for sale. “What is the status of privatisation? Where is the process and
what progress has been made?” Keitany asked.
MPs also pressed
Adan on whether the company had visibility of Kalahari Cement Limited’s
long-term strategy, given its existing operations through Bamburi Cement — a
direct competitor of EAPC. Adan said the company had no official communication
from the prospective buyer, noting that “much of what we hear is market
speculation.”
Members, however, expressed
disbelief. “It is inconceivable that a shareholder can begin disposing of
shares without the board having some visibility,” one MP remarked, questioning
why no due diligence had been conducted with EAP
