The Federal High Court in Ikoyi, Lagos to begin hearing in a suit challenging the proposed sale of Lafarge Africa Plc to Chinese firm, Huaxin Cement Limited on Wednesday.
This follows a major legal blow to Lafarge Africa and its parent company, Holcim Group, after the court dismissed a motion seeking to challenge its jurisdiction to hear the case.
The suit was initiated by Strategic Consultancy Limited, a Nigerian firm and shareholder in Lafarge Africa, over what it describes as a “surreptitious” divestment of the company’s 83.81 percent majority shares held by Holcim Group.
The planned sale to Huaxin Cement, a Chinese-based multinational, is at the centre of the controversy.
The court is expected to examine whether the transaction violates Nigerian laws, including the Companies and Allied Matters Act (CAMA) 2020.
Others are the Securities and Exchange Commission Act, and the Nigeria Investment Promotion Commission (NIPC) Act, especially in relation to minority shareholder rights and dealings with foreign entities not registered in Nigeria.
Lafarge Africa, which is publicly listed on the Nigerian Exchange, became a dominant force in the local cement market after acquiring 83 percent stakes in three former federal government-owned cement firms during the privatisation exercises of 2001 and 2002.
Holcim Group, a Swiss multinational and majority owner of Lafarge Africa, had notified the Securities and Exchange Commission (SEC) of an ongoing internal restructuring.
However, Strategic Consultancy alleged that the planned share divestment was conducted secretly and without giving local shareholders, including itself, the right of first refusal or opportunity to acquire the shares.
Meanwhile the suit, filed against Lafarge Africa, Holcim Group, the Nigerian Exchange Limited, and the Central Securities Clearing System, argues that the transaction undermines the rights of minority shareholders and involved unlawful dealings with unregistered foreign corporations.
During the pre-trial session on May 15, presided over by Justice Lewis Allagoa, the court ruled against Lafarge’s preliminary objection contesting its jurisdiction.
The objection, raised by Babatunde Fagbohunlu (SAN) for Lafarge and Uzoma Azikiwe (SAN) for Holcim Group, was dismissed following arguments from Dr D.A. Awosika (SAN), counsel to Strategic Consultancy Limited.
“The 1st and 2nd defendants’ motion objecting to the Court’s jurisdiction is hereby dismissed,” Justice had Allagoa ruled.
However in a further twist, the court ordered that Caricement BV (Netherlands) and Associated International Cements Ltd (England) be joined as the 5th and 6th defendants, respectively.
Both entities were identified by the respondents as beneficial owners of the shares in question.
“The court also granted leave to serve the new parties with court documents outside Nigeria.
“It is hereby ordered that the persons sought to be joined herein and hereby joined as prayed and leave to issue and serve the originating summons out of jurisdiction is hereby granted,” the judge held.