PPC shares slump after CE resigns abruptly
The price of PPC shares dropped by 9% to close at R4.45 a share yesterday after the listed cement and lime producer reported that chief executive Darryll Castle had resigned and reports emerged that talks about a proposed merger between PPC and rival AfriSam were about to collapse.
PPC said the company and Castle had “agreed to part ways” and Castle had resigned his PPC group directorships and would be “pursuing other interests”. However, PPC said Castle would be available to the PPC group for a period of six months to ensure a smooth handover. PPC chairperson Peter Nelson said the nominations committee of the board would immediately commence the process to appoint a permanent chief executive.
Johan Claassen, the MD of PPC’s South African cement business has been appointed interim chief executive of PPC and an executive director of the group with immediate effect. Claassen has been with PPC for 28 years and has experience in all facets of the business, the company said
Castle was appointed chief executive of PPC in December 2014 following the acrimonious departure of former chief executive Ketso Gordhan, who resigned and the board refused to allow him to retract his resignation.
Castle has overseen the delivery of PPC’s African build programme with the delivery of new plants in the Democratic Republic of Congo, Ethiopia, Rwanda and Zimbabwe, which had the aim of generating 40% of its total revenue from outside of South Africa by this year, and a R4billion rights issue last year to relieve the pressure on the company’s balance sheet.
Castle confirmed last month that PPC wanted to be the architect of the consolidation of the cement industry in South Africa and saw its prospective merger with AfriSam as the first step in this process.
However, Bloomberg reported yesterday that merger talks between PPC and AfriSam were close to falling apart for the second time, because the companies had failed to agree on issues ranging from management control to the structure of the deal.
Bloomberg said that a successful tie-up was not yet off the table and a final decision could be made by the end of next month. The last attempt to combine the businesses failed in March 2015.