Bamburi Cement paid its former controlling shareholder Lafarge a total of Sh27.2 billion for technical services in the 25 years to December 2024, marking one of the largest transactions between a Kenyan firm and its multinational parent.
The company is now fully owned by Tanzania’s Amsons Group, which acquired it at a cost of Sh23.5 billion or Sh65 per share in a deal that is expected to have resulted in termination or renegotiation of Bamburi’s long running contracts with various suppliers.
“The company received technical assistance from the former majority shareholder, Lafarge SA, which was paid for under a five-year agreement,” Bamburi said in its annual report for 2024 when it paid Sh714 million for these services.
The company had paid Lafarge Sh469 million in the prior year under the arrangement.
The biggest payout to Lafarge –for services such as developing new building products— was in 2008 when it received Sh5.2 billion from the Kenyan subsidiary.
Bamburi said in the report that intercompany transactions are transparent and reflect how independent parties would trade as they act in their own self-interest.
“The sales to and purchases from related parties are made on terms as specified in the transfer pricing arrangement between the group companies,” Bamburi said in the 2024 report.
The sale of technical services to Bamburi was one of the lucrative deals for LafargeHolcim –which arose from the merger of Lafarge and Holcim in July 2015— when it was the majority owner of the Kenyan cement firm.
Bamburi disclosed in its 2021 annual report that it had lent its parent firm Sh3.5 billion, at a cheap interest rate of 1.44 percent.
Hima Cement, a former subsidiary of Bamburi, on the other hand was lent Sh2.2 billion at an effective interest rate of 5.41 percent by a financing entity controlled by LafargeHolcim.
Several subsidiaries based in Kenya have been paying their parent firms substantial amounts for technical services and brand rights.
Stanbic Holdings, for instance, paid its South Africa-based parent firm Standard Bank Sh1.14 billion as franchise fees in the year ended December 2024. This was a slight reduction from Sh1.22 billion it paid in 2023.
Standard Bank collects franchise fees from subsidiaries in various markets including Stanbic Uganda Holdings Limited.
LafargeHolcim’s sale of Bamburi is part of its reorganisation in a strategy that has seen it exit multiple African markets as it expands in others.
“In Latin America we expanded in Guatemala through an acquisition, and acquired Comacsa and Mixercon in Peru to enter that market...We closed the divestments of our activities in Uganda, Tanzania, South Africa, Russia and Kenya. We also signed an agreement to sell our Nigerian business. The transaction is subject to customary and regulatory approvals.”
In addition, our joint venture Cement Australia signed an agreement to acquire a division of the Buckeridge Group of Companies in Australia subject to regulatory approvals,” the multinational said.
In Latin America we expanded in Guatemala through an acquisition, and acquired Comacsa and Mixercon in Peru to enter that market. In addition, our joint venture Cement Australia signed an agreement to acquire a division of the Buckeridge Group of Companies (BCG) in Australia subject to regulatory approvals,” the multinational said.
