Steel magnate Narendra Raval officially took over cash-strapped Athi River Mining Cement (ARM), bringing to an end a 45-year leadership by the Paunrana family.
The acquisition will propel Mr Raval to be a top cement producer in the region when the production capacities of National Cement, owned by his Devki Group, and ARM are combined.
The transfer was dramatic to the last minute, with Raval fighting pesky security guards who briefly denied him entry into the ARM premises in Athi River.
“We are just following laws and regulations. In the morning we had not received the orders to let him in, but now we have,” said one of the guards after he kept the new owner waiting for more than 10 minutes.
Raval paid Sh5 billion for ARM, which is still under receivership. Following the conclusion of the transaction, he will become the largest cement manufacturer in Kenya with the combined production capacity of National Cement and ARM reaching three million tonnes per year.
“We are happy to inform you today that we have been able to complete the ARM acquisition and cleared all the transaction cost amounting to Sh5 billion to PriceWaterhouseCoopers (PwC),” he said.
He promised to retain all the 1,100 workers and also said the salaries of ARM’s employees would be harmonised with those of their colleagues at National Cement.
PwC said a Chinese firm has started the process of acquiring ARM’s Tanzanian unit, which was not part of the acquisition of the Kenyan operation.
Pradeep Paunrana, the former chief executive of ARM, had for a while been fighting a losing battle against the acquisition.
The company was placed under administration on August 17, 2018, and its shares suspended from trading on the Nairobi Securities Exchange three days later.
The Competition Authority of Kenya (CAK) on October 4, 2019, gave National Cement the nod to take over the operations of ARM.
In a letter signed by Chairman Nelson Ndirangu and Director General Wangombe Kariuki, CAK asked National Cement to retain at least 95 per cent (1,054 of 1,100) of ARM employees.
“We have gone a step further to retain all the employees as we work together to improve the productivity and create more employment in future,” said Raval.
He also told employees that the firm would sell them building materials – cement and steel – at half price but would only do this through an employee Sacco, urging them to form one.
ARM has been in deep problems and has for some years been navigating financial and management turmoil, which at some point made the future of the company uncertain.
Paunrana also fought a gruelling court battle with prospective liquidators looking to sell off the family-owned business to repay debts.
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