Report On Inquiry Into The Proposed Sale Of Shares In East African Portland Cement Plc

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TABLEOFCONTENTS

| TABLEOFCONTENTS | |------------------------------------------------------------------------------------------------| | LISTOFABREVIATIONS | | LISTOFANNEXURES | | CHAIRPERSON'SFOREWORD | | CHAPTERONE | | 1.0PREFACE | | 1.IEstablishmentandMandateoftheCommittee | | 1.2CommitteeMembership 5 | | CHAPTERTWO 6 | | 2.0INTRODUCTION 6 | | 2.ITERMSOFREFERENCE 6 | | CHAPTERTHREE 8 | | 3.0SUBMISSIONS 8 | | 3.1SubmissionsbyEastAfricanPortlandCement(EAPC) 8 | | 3.2SubmissionsbyNational Treasury. 9 | | 3.3SubmissionbytheBoardMembersofEastAfricaPortlandCement 12 | | 3.4submissionbyCompetitionAuthorityofKenya(CAK) 14 | | 3.5SubmissionbyAttorneyGeneral 16 | | 3.6SubmissionbyCapitalMarketsAuthority. 17 | | 3.7.Submission by Ministry of Investment,Trade,and Industry State Department for Industry...18 | | CHAPTERFOUR .20 | | 4.1COMMITTEEOBSERVATIONS 20 | | 30 | | 4.3COMMITTEERECOMMENDATIONS |

LISTOFABREVIATIONS

AG

• Attorney-General

AIC

-Associated International Cement Limited

CAK

• Competition Authority of Kenya

Cap

• Chapter (of the Laws of Kenya)

CMA

• Capital Markets Authority

CoK

• Constitution of Kenya, 2010

CS

-Cabinet Secretary

EAPC PIc

-East African Portland Cement Public Limited Company

GoK

• Government of Kenya

KES

• Kenya Shillings

MITI

• Ministry of Investment, Trade and Industry

NSE

• Nairobi Securities Exchange

NSSF

• National Social Security Fund

SPA

• Share Purchase Agreement

TOR

-Terms of Reference

LISTOFANNEXURES

Annex I: Submissions by East African Portland Cement (EAPC)

AnnexIl:SubmissionsbyNational Treasury

Annex Ill: Submission by the Board Members of East Africa Portland Cement

Annex IV: Submission by Competition Authority of Kenya (CAK)

Annex V: Submission by Attorney General

Annex Vl: Submission by Capital Markets Authority

AnnexVll:Submission by Ministry of Investment,Trade,and IndustryState DepartmentforIndustry

CHAIRPERSON'SFOREWORD

This report details the consideration,findings and recommendations of the Departmental Committee on Trade, Industry, and Cooperatives arising from the inquiry into the proposed sale ofshares held by Holcim Group in EastAfrican Portland Cement PLC(EAPCPLC) toKalahari CementLimited.

The Committee undertook this inquiry pursuant to its mandate under Standing Order 216 (5) of theNationalAssemblyStandingOrderswhichempowerstheCommitteeto,interalia,investigate, inquire into,and report on all matters relating to the mandate,management activities,

The inquiry was occasioned by heightened public interest and the potential implications of the proposed sale on corporate governance, market competition, public investment, and national industrial policy. The Committee examined in particular, the potential shift in corporate control arising from Kalahari Cement Limited's proposed acquisition of a combined 41.7% shareholding in EAPC PLC, through the purchase of shares held by Holcim's subsidiaries namely, Associated InternationalCementLimitedandCementiaHoldingAG.TheCommitteealsointerrogatedthe proposed sale price of KEs 27.30 per share, a valuation substantially below the prevailing market price averagingKEs58 pershare during theperiod underreview.

The Committee held several meetings in the course of this inquiry, and it heard and received submissions from the East African Portland Cement(EAPC PLC) Competition Authority of Kenya (CAK), Capital Markets Authority (CMA, National Treasury in its capacity as a major shareholder in EAPC PLC, The Office of the Attorney-General as the principal legal advisor to the government and thePrincipalSecretaryforIndustrialization.

The Committee acknowledges the strategic role of EAPC PLC in Kenya's cement industry and recognizes that its stability is of both economic and public interest. This warrants a transparent and well-regulated process in any transfer of significant ownership. The inquiry revealed public interest assessments, which could expose the market to undervaluation, erosion of shareholdervalue,and concentrationofcontrol instrategicsectors.Accordingly,theCommittee hasproposedspecificrecommendationsandlegislativeinterventionsaimedatstrengthening marketsframeworkswithinternationalbestpractice.

The Committee is thankful to theOffice of the Speaker,the OfficeoftheClerk and the Secretariat for their support. The Committee recognizes and appreciates the contributions made by eachmember of theCommittee in thecourseof this investigation.

and pursuant to Standing Order 199, it is my pleasant duty and honour to submit to this House, the Committee's report on the jnquiry into the proposed sale of shares in East African Portland CementPLC.

Hoh.Bernard Masaka Shinali, MP

Chairperson, Departmental Committee on Trade, Industry and Cooperatives

CHAPTERONE

1.0 PREFACE

I.I Establishment and Mandate ofthe Committee

• 1.The Departmental Committee on Trade,Industry and Cooperatives is one of theDepartmentalCommitteesoftheNational Assemblyestablished under StandingOrder216whose mandatepursuanttotheStandingOrder216(5) is asfollows:
• a)To investigate,inquire into,andreporton all mattersrelating to themandate, management,activities,administration,operations and estimates of the assignedministriesanddepartments;
• b)To study the programme and policy objectives of ministries and departments and the effectiveness of the implementation;
• C onaquarterlybasis,monitorandreportontheimplementationofthe nationalbudgetinrespectofitsmandate;
• d)Tostudy andreview all legislationreferred toit;
• e) To study, assess and analyse the relative success of the ministries and departmentsasmeasuredbytheresultsobtainedascomparedwiththeir stated objectives;
• t Toinvestigate andinquire into all mattersrelating to the assignedministries and departments as they may deem necessary,and as may be referred to themby theHouse;
• g TovetandreportonallappointmentswheretheConstitutionoranylaw requires the National Assembly to approve,except those under Standing Order204(Committee onAppointments);
• h)To examine treaties,agreements and conventions;
• i Tomakereports andrecommendationsto theHouse asoften aspossible, includingrecommendation ofproposed legislation;
• i To considerreportsofCommissions and IndependentOffices submittedto theHousepursuant to theprovisionsofArticle254oftheConstitution;and
• k)To examine any questions raised by Members ona matter within its mandate.
• 2.In accordance with the Second Schedule to the Standing Orders,the Committee is mandated to consider, Trade,including securities exchange, consumer protection,pricing policies,commerce,industrialization including special economic zones,enterprise promotion and development, Micro, small ∧medium enterprise (MSMEs), and small and medium enterprise (SMEs), intellectual property, industry standards, anti-counterfeit and cooperative development.

3. In executing its mandate, the Committee oversees the Ministry of Investments, Trade and Industry and the Ministry of Cooperatives and Micro,Medium and Small Enterprises (MSMEs) Development.

1.2 Committee Membership

5. The House constituted the Committee on Thursday, 27th October, 2022 and it comprises the following Members:

Chairperson

Hon.Bernard Masaka Shinali,MP lkolomani Constituency

United DemocraticAlliance (UDA)

Vice Chairperson

Hon. Marianne Jebet Kitany, MP Aldai. Constituency

United Democratic Alliance (UDA)

Hon.Robert Githinji Gichimu,MP Gichugu Constituency

Hon.(Dr.) Wilberforce Ojiambo Oundo, MP Funyula Constituency

United DemocraticAlliance (UDA)

OrangeDemocraticMovement(oDM)

Hon. Dr. Beatrice Kahai Adagala, MP Vihiga County

Hon. Joyce Kamene, MP Machakos County Wiper Democratic Movement-Kenya

Amani National Congress (ANC)

Hon.Joshua Mbithi Mutua Mwalyo,MP Masinga Constituency IndependentMember

Hon.Anthony Tom Oluoch, MP MathareConstituency Orange Democratic Movement (ODM)

Hon. Michael Wainaina Wambugu, MP Othaya Constituency\_ United DemocraticAlliance (UDA)

Hon.Alfred Kiprono Mutai, MP Kuresoi North United Democratic Alliance (UDA)

Hon. Guyo Adhe Wario, MP North Horr Constituency KANU

Hon.Samuel Sakimba Parashina, MP KajiadoSouth Orange Democratic Movement (ODM)

Hon.Amos Maina Mwago, MP Starehe Constituency Jubilee Party

Hon.AdamsKorir Kipsanai,MP Keiyo North Constituency United DemocraticAlliance (UDA)

Hon.John OkanoBwire,MP Taveta Constituency WiperDemocratic Movement Kenya

CHAPTER TWO

2.0INTRODUCTION

• 4.The Departmental Committee on Trade,Industry and Cooperatives of the National Assembly,during its Sitting held on 14th August 2025,resolved to carryoutaninquiryintotheproposedsaleofsharesofEastAfricanPortland Cement(EAPC)PLC.

5. The inquiry was triggered by public interest and significant concerns nationalimportance. 6. The subject of this inquiry is the proposed sale of 26,324,884 shares, representing a 29.25% stake in EAPC PLC, held by Holcim Group.

• 7.The shares are being sold to Kalahari Cement Ltd at an alleged price of Kshs. 27.30per share.This price is a cause for concern as it is substantially below theprevailingmarketaverageof approximatelyKshs.53per share andthe Committeebelievesthattheundervaluationcouldunderminemarketfairness.
• 8.lf thesale isfinalized,Kalahari Cementwouldbecomethelargestshareholder witha cumulative41.7%stake consideringits affiliationwithBamburiCement Ltd which currently holds12.5%of EAPC PLC.This proposed change in the shareholding structure has raised concerns regarding potentialaltering of 25.3% and the National Social Security Fund's (NSSF) 27% holdings.

2.ITERMSOFREFERENCE

In conducting this investigation, the Committee was guided by the following terms of reference:

• 9.Based on the terms of reference the Committee raised the following issues for determination:

• a.To examine the applicable legal frameworkand the transaction's compliance with the Companies Act, the Capital Markets Act, the Competition Act, and otherapplicablelaws.
• b. To scrutinize the process followed in the proposed share sale, including the role of the National Treasury,the Capital Markets Authority (CMA),the Competition Authority of Kenya (CAK),and the Office of the AttorneyGeneral, particularly with respect to approvals issued and legal advice provided.
• c.To assess the potential alteration of corporate control and evaluatemeasures in place to safeguard the interests of all shareholders, particularly the Government (National Treasury), pensioners (NSSF), and minority investors.
• d.To investigate the methodology used to determine thevalue of the shares andtherationalefortheproposedsaleprice.
• e.To inquire into the anticipated impact of the proposed sale on the company's employees, customers, the broader public, and national industrial policy.

CHAPTER THREE

3.0SUBMISSIONS

• 3.1 Submissions by East African Portland Cement (EAPC)
• 10.EAPC submitted that, the current shareholding structure of EAPC PLC is as follows: National Social Security Fund (NSSF) holds 27%, The National Treasuryholds 25.3%,CementiaHoldings AG andAssociated International Cement Ltd (both subsidiaries of Holcim Group) each hold 14.6%, Bamburi CementLtdholds12.5%,andminorityshareholdershold6%Theproposed sale of shares from the Holcim Group subsidiaries toKalahari Cement Ltd wouldresult in thebuyer holding29.2%of thecompany's shares.When combined with the existing association with Bamburi Cement Ltd, the acquirer'stotalstakewouldbe41.7%.
• 11.Regarding board representation,two of the five directors representing shareholders arecurrently nominatedby theHolcim Group,areflection of theirhistorical 41.7%ownership.EAPCPLCanticipates that this levelof representation will be transferred to thenew acquirer,Kalahari Cement Ltd, upon completion of the sale.The board alsoincludes directors nominated by theNational Treasuryandtheparentministry,as wellasa governmentappointed director representing minority shareholders°. The Chairman is also appointed by the Government of Kenya.
• 12.EAPCPLCstated thattherearenoformal shareholderagreementscurrently pursuingvaluethroughdividends.Theplanincludesinitiativeslikebalancesheet restructuring by selling off investment property at market value to reduce liabilities and reinvest in plant refurbishment.These efforts are designed to share. The company also noted its strategic alignment with government priorities, such as the Affordable Housing program and infrastructure expansion.

13. EAPC PLC has not been engaged in any communication with Kalahari Cement Ltd about their strategic plans for the company after the acquisition.As a result, the company requested the committee to direct inquiries regarding the buyer's long-term plans, employment levels, wages, benefits, and share valuation methodology toKalahari Cement Ltd or theHolcimGroup. 14. Furthermore, the company clarified that it could not provide details on the due diligence undertakenfor the transaction,as the engagements between Holcim GroupandKalahariCementLtdareoutsideitspurview.

3.2 Submissions by National Treasury

15. The proposed saleof EastAfricanPortland CementPlc is governedby the following capital markets legal framework: 2. i.s Capital Markets (Public Offers,Listing and Disclosure Regulations) 2023, which require approval of CMA where there is a transfer of securities outside the Securities Exchange;

• ii. The eligibility requirements stipulated under the Capital Markets (Public Offers,Listing and Disclosure Regulations) 2023,which demand free transferabilityoflistedsecurities;and
• ili. Regulation 5 of the Capital Markets (Takeovers and Mergers) Regulations 2002,which mandates CMA to grant an exemption in shareholding in a company do not wish to buy out other shareholders.

5. 16.InDecember2024,HolcimmadeadecisiontoexitsomemarketsinAfricaas part of a global strategy to streamline its operations. As a result of this decision, Holcim sold its businesses in Nigeria,Uganda,Tanzania and Zimbabwe. 17. In Kenya, Holcim (through its subsidiaries Fincem and Kencem) entered into anirrevocableundertakingtosell58.6%ofitsshareholdinginBamburiCement Plc to Amsons Industries (K) Limited. The acquisition was concluded in December2024following a mandatory takeover offer byAmsons.The offer byAmsons also targetedothershareholdersofBamburi leadingto acquisition ofI00%shareholdinginBamburiCementPlc 7. 18.Acquisitionof EastAfricanPortlandCementPlc sharesbyKalahari Cement of IntentionbyKalahariCementLimitedonJuly31,2025 8. 19.The background of the transaction is that the parties entered into a Share Purchase Agreement dated 31 July 2025 ("SPA"), under which Kalahari Cement Limitedwill acquirethefollowing: 9. a)13,144,442 ordinary shares in EAPC(representing 14.6% of the issued share capital)from Associated International CementLimited (AlC),a companyincorporated under the laws of England;and 13,180,442ordinary shares inEAPC(alsorepresentingI4.6%)from CementiaHoldingAG,a companyincorporated under thelawsofSwitzerland. 10. 20.HolcimLimitedis theultimatebeneficialowner of the 26,324,884ordinary shares in EAPC approximately 29.2% of the issued share capital,held through the above-named subsidiaries AiC and Cementia ("Sellers"). 11. 21.lf successfully completed,the transactionwill result inKalahari and its related parties, acquiring a controlling interest in EAPC,with a total shareholding of approximately 41.7%, inclusive of the 12.5% already held indirectly through Bamburi Cement'sstakeinEAPC. 12. control in a listed company is required to follow the following procedure: 13. i.Issue a public announcement.

• ii. Prepare,publish and serve a Notice of Intention on CMA,the Exchange, the listed company as well as the Competition Authority of Kenya.
• ili. Apply for an exemption under Regulation 5 of the Capital Markets (Takeovers and Mergers) Regulations 2002,where they do not wish to buyoutothershareholders.

23. Application for Exemption to make a mandatory takeover offer: Regulations 4(3) of the Capital Markets (Take-overs and Mergers) Regulations 2002 provides that where a person has acquired effective control in a listed company andhasnointentionofmakingatake-overoffertotheothershareholders, shallmakea public announcementandshallapplyto theAuthorityfor exemption from the take-over requirements under regulation 5.Effective controlthresholdisfrom25%oftheissuedsharecapitalandabove. 4. description ofpersons or take-over offers subject to such conditions as may beimposedbytheAuthority. 5. yo e o aa xa (e s o or followinggrounds: 1. anacquisitionforthepurposeofastrategicinvestmentina listed company that is tied up withmanagementor anyother technical support relevant to the business of such company;

• ii. a management buy-out involving a majority of the employees of the offeree;
• ili. arestructuring of thelistedcompany's share capitalincluding Authority;
• iv. an acquisition of a listed company in financial distress;
• V. anacquisitionofeffective control arisingoutofdisposalofpledged securities;
• vi. themaintenanceofdomesticshareholdingforstrategicreason(s);or
• vii. anyothercircumstanceswhichintheopinionoftheAuthorityserves publicinterest.

13. Regulations on the grounds of being a strategic investor in a listed company that is tied up with management or other technical support relevant to the business of such company. The applicant also relied on circumstances which serve thepublicinterest,by ensuring thatKalahari,asalong-termstrategic investor, assists EAPC in achieving its strategic objectives whilst deepening the capital marketsregimewhichisvital forKenya'seconomicprosperity. 14. 27.Grant of Exemption:After review of the application,the capital markets Authority granted the exemption on the following conditions:obtaining the requisite approvalsfrom the Competition Authority of Kenya as perpart D of the Competition Act. notification to, and approval of the material change by

• theCabinetSecretary,MinistryofMining,BlueEconomyand MaritimeAffairs asperSections51(6)and(7)oftheMiningAct.
• shareholders and issueofa Noticeof Intentionwhich is alsopublished in the newspapers.We confirm that Kalahari complied with all these requirements. Therelevant announcementswerepublished in theDailyNation aswell asthe East African Standard newspapers on August I, 2025.
• 29.The Share Purchase Agreement and Conditions Precedent:Kalahari entered intoaSharePurchaseAgreementandeachof theSellers acceptedKalahari's offertoacquiretheshares.Completionofthetransactionisconditionalupon the satisfaction or, where legally permissible, waiver of the following conditions precedent:
• i. Receipt of approval from the Competition Authority;
• ii. The granting by the CMA of an exemption to Kalahari under Regulation5of the Capital Markets(Takeovers and Mergers) Regulations2002,exemptingKalaharifromtheobligationtomakea mandatory takeover offerto EAPC shareholders;
• ili. With respect to EAPC's mining licence,notification to and receipt ofwritten approval fromtheCabinetSecretaryfor theMinistryof Mining, Blue Economy and Maritime Affairs,in accordance with Sections51(6)and51(7)oftheMiningAct;
• iv. ReceiptfromCMAofapproval toimplementthetransactionasa private transfer;and
• V. Should Kalahari opt to finance any portion of the consideration ratherthanpayitfullyincash,itshallprovidetheSellerswithan unconditional,irrevocable,on-demandguarantee.

30. Kalahari does not intend to delist EAPC upon completion of the proposed acquisition. Instead,Kalahari plans to maintain EAPC's status as a publicly listed company, recognizing the strategic value of retaining a diverse base of local and internationalinvestorsasco-shareholders.Kalahariindicateditspositionthat a continued listing will support EAPC's long-term growth ambitions by enhancing access to both equity and debt capital markets when required. Maintaining EAPC's listing willalso offer investors the opportunity to instrumental to infrastructure development across Kenya, Uganda, and the broaderEastAfricanregion. 31. After considering the application, CMA granted an exemption on August 5, 2025. The transaction also got the following subsequent approvals:

• i. theCompetitionAct.
• ii. ApprovalofthematerialchangebytheCabinetSecretary,Ministry ofMining,BlueEconomyandMaritimeAffairsasperSections51(6) and(7)oftheMiningAct.

32. The National Treasury confirmed that, the proposed transaction was reviewed and an exemption granted as required under the Capital Markets (Take-overs andMergers)Regulations2002.Alldisclosurestoshareholdersweremadein

Reportof theDepartmental Committee of Tradeontheinquiryinto theproposedsaleof sharesinEastAfrican PortlandCementPlc accordance with the Capital Markets Act and the Capital Markets (Take-overs and Mergers)Regulations2002.

3.3 Submission by the Board Members of East Africa Portland Cement Theboard submitted that,

• 33.Theproposed transaction is a private sale betweenHolcim Group(through its subsidiariesCementiaandAssociatedInternationalCement)andKalahari Cement Ltd. EAPC Plc was not a party to the valuation or negotiation ofthespecificvaluationmethodologyusedbythesellerandbuyer.

34. However, the Board's primary concern is that the transaction price of KES KES58.25).Tosafeguard all shareholders,theBoard'sdutyisto ensure the plan,focused on balance sheet restructuring and operational efficiency,is designedtodeliverthisvalue.

• (Securities)(Public Offers,Listing and Disclosures)Regulations, the Company's KalahariCementreceivedon30thJuly2025.Thisnoticewaspromptly disclosed to the public on 3lst July 2025 via the Nairobi Securities Exchange, fulflling our initial obligation.
• 36.However,the Board recognizes a critical dimension that elevates this CementalsoholdsacontrollinginterestinBamburiCementPLC,whichisa current12.5%shareholderofEAPCPlc.
• 37.This fact of common control is highly material.Post-transaction, the beneficial ownerwouldexerciseinfluenceoveracombinedstakeofapproximately41.7% inEAPCPlc(29.2%fromKalahari+12.5%fromBamburi).While the29.2% acquisitionalonesitsbelowthe30%thresholdforamandatorytakeoveroffer, orareundercommoncontrol.
• 38.Therefore,while the literal 29.2% transactionmay nottrigger a mandatory offer, the substance of the transaction the aggregation of a 41.7% stake under a single beneficial owner raises significant questions that may necessitate further disclosure and regulatory scrutiny to ensure a complete and transparentview for all shareholders and the market.TheBoard is seeking compliancewiththespiritandletterofthelaw.

39. The sale of shares by a major shareholder is an ownership change, not an operational decisionbytheCompany.EAPCPlc's strategicvision,as detailed inour five-yearplan,remainsunchangedand isfocusedongrowth,market Corporate governance regulations, including the Code of Corporate

• Governance,provide the framework for the Board to hold management accountable to this strategy, regardless of shareholder identity.
• 40.Theproposedsalewillprofoundlyaffectownershipand islikelytoleadtoa significant shift in control andboardvotingrights.
• 41.WhileKalahari Cementwill become the direct registered holder of a 29.2% stake,thecritical factoristhatthebeneficialownerofKalahariCementalso controlsBamburiCementLtd,which alreadyholdsa12.5%stake inEAPCPlc.
• 42.This means that post-transaction, a single beneficial owner will exert influence overacombined41.7%ofthecompany.Thisconsolidatedblockissubstantially larger than thatofanyother shareholder,including NSSF(27%)andthe NationalTreasury(25.3%).

43. Based on prevailing corporate practice, it is expected that this level of ownershipwilltranslateintoarequestforproportionalboardrepresentation. However,thekey implication is that the beneficialowner may effectively controlthevotesofdirectorsnominatedbybothKalahariandtheexisting Bamburistake.

• 44.Therefore, this is not merely a change in one shareholder,but a consolidation ofcontrol.TheBoardanticipatesthatthiswillalter thedynamicsofboard deliberations and voting,moving from a structure with several significant, distinct shareholders toone where a single controllinginterest holdsa dominant influence.The alignment between NSSF and the National Treasury willbecomeevenmorecritical tobalancethisconsolidatedinfluence.
• 45.The primary legal safeguard against undue concentration of ownership is the regulatory review by the Competition Authority of Kenya (CAK)and the continuous disclosure regime of the Capital Markets Authority (CMA).
• 46.TheBoardhasreceivednocommunicationfromKalahariCementregarding itsstrategicintentions.Therefore,itisimpossibletoprovidea definitiveimpact assessment.The Board's commitment is to ensure operational continuity and stability.We have assuredour employees thatthe company's strategicplan remainsineffect.Forcustomersand the public,the Board is focusedon maintaininga reliable supply of quality cementto all ourcustomers,andwe do notforeseeanyimmediatedisruption.

47. The transacting parties are responsible for securing necessary approvals. From the Company's perspective, the process to date has complied with the initial disclosure requirements under CMA rules. The Board is aware that the transactionissubjecttosuccessful transferofsharesonthecompany'sregister, compliancewiththeCompaniesActandourArticlesofAssociation.

• 48.The governance structure of EAPC Plc is designed to comply with the Companies Act, the State Corporations Act (as a state corporation),and the CMA Code of Corporate Governance.The Board composition includes directorsnominatedbymajorshareholdersandgovernmentrepresentatives, asisstandardforahybridentitywithbothprivateandgovernmentownership. Thisstructure hasbeenvalidated throughyearsof operation and audits.
• 49.TheBoardisawareofacourtorder temporarilyhaltingthetransaction, obtained on grounds of potential anti-competitive effects.The Company has been joined to the proceedings. Our legal strategy is to cooperate fully with the courtwhile demonstrating thatEAPCPlcis an independent entityfocused

Report of theDepartmental Committee of Trade on the inquiryinto the proposed saleof sharesinEastAfrican PortlandCementPlc

• onitscommercialobjectives.Weareseekinglegaladvicetoensurethe Company's interests are protected throughout the process.

50. The overarching principle of public interest is paramount. The Board assures theCommitteethatitseverydecisionisguidedbythelong-termsustainability of EAPC Plc,which directly serves thepublicinterest through job creation, supportforinfrastructure,andsafeguarding theinvestments ofKenyan pensioners(NSSF).TheBoardremainsreadytoworkwith the Committeeand allregulatorsto ensure this transaction,ifitproceeds,ultimatelybenefits the companyandthenation.

3.4 submission by Competition Authority of Kenya (CAk)

The Competition Authority of Kenya (CAK) submitted that,

52. The merger application process is detailed in the Act, placing a mandatory obligation on undertakings to notify the Authority in writing. The Authority assesses the application, potentially requesting more information, inviting parties for a hearing,or inviting views from relevant stakeholders and governmentagencies. 2. 51.The CAK'score mandate includesregulating market structureby analyzing and the analysis focusing on potential impacts on competition and public interest. Kenya operates a suspensory merger regime, meaning any merger falling under the Competition Act,Cap 504,is unenforceable without the Authority's approval.Amerger or takeoveroccurswhen oneundertaking directlyor indirectly acquires or establishescontroloverthewhole orpartof another undertaking'sbusiness. 3. 53.The Authority's determination, which may approve, decline, or approve with conditions,must be made within sixty days after receiving complete information and is based on a balancing approach using the substantial lessening ofcompetition test and publicinterest test.Key criteria for determination includetheextenttowhichthemergerwouldlessencompetition,restrict trade,resultin a dominantposition,affect a particular sector/region,affect employment, or affect the ability of small undertakings to compete. 54. Regarding the specific proposed transaction, Kalahari Cement Limited sought toacquire29.2%ofthesharesinEAPCCfromAssociatedInternational CementLimited andCementiaHoldingsAG.TheAuthorityreceived a notice for an advisory opinion on August 13,2025. The ultimate control of both Bamburi CementandKalahariCementLimited isheldbyEdhahAbdallahMunif, who,post-transaction, would have a 41.7% shareholding in EAPCC through theentitieshecontrols. 55. However, the Authority concluded in its advisory opinion that the proposed acquisitiondoesnot amounttoa mergerbecause the41.7% shareholdingwill notresultinachange ofcontrolof thetargetundertaking,nor dothe shares conferanyvetorightsthatwouldamounttoindirectcontrol. 6. 56.Consequently,the transaction does not require notification before its implementationunderSection43(l)oftheAct.Sincethetransactionisnot notifiable,theAuthorityislegallyconstrainedfromconductingacompetition

• and public interest assessment as per Section 42 of the Act.The Authority's focusisontheefectofthemergeron themarketandconsumers,noton shareholders' gains.The advisory opinion was sought as per Rule 14 of the Competition (General) Rules, 2019.
• 57.The Competition Authority of Kenya (CAK),established under the Competition Act, Cap 504, is mandated to promote and safeguard country.TheActprovidesaclearframeworkthatrequiresmergersmeeting notificationthresholdstobereviewedtodeterminetheirpotentialimpacton marketstructure,competition,andpublicinterest.
• dominance,definedasmorethan50%marketshare,orstrengthenanexisting dominant position.Kenya's merger regime is suspensory,meaning mergers that meet the criteria of a merger include acquisitions of shares, assets, controlling interests,amalgamations, takeovers,vertical integrations,or indirectcontrol throughforeignsubsidiaries.

59. The submission under review involved a request for advisory opinion regarding theacquisitionofa41.7%shareholdinginEastAfricanPortlandCement Company (EAPCC) by Kalahari Cement Limited,both under the ultimate control of Edhah Abdallah Munif.The Authority established thattheproposed acquisitionwouldnotconferdirectorindirectcontrolsincethesharesdidnot includevetorightsormajorityownership,andthusthetransactiondidnot amounttoamergerundertheAct. 60. Consequently, no notification was required, and no public interest or dominance assessmentwasconducted.Nevertheless,in linewithSection9(g) oftheAct,theAuthorityhasembarkedonamarketstudyofthecement sector, aimed at understanding market dynamics, concentration levels, pricing, determine thepresence of cartel behavior,theimpactof buyerpower on SMEs, and potential exploitative practices within distribution and retail chains.

• 61.TheAuthoritynotedthatwhilenopartytothistransactionwouldacquire dominance, it remains vigilant against mergers that may substantially lessen competitionorfacilitatemonopolisticstructures.SafeguardswithintheAct alsoprohibitabuseofdominanceunderSections23and24,ensuringthateven orconsumers.
• 62.The submission also benchmarked international best practices,citing the United States and European Union merger control regimes. In the U.S.,merger reviewundertheClaytonActandShermanActisnon-suspensory,emphasizing earlypreventionofanti-competitiveeffects,whileintheEU,mergercontrol is suspensory,requiring notification for large transactions that may distort barriers,and the durability of marketpowerwhen assessing dominance.

63. With regard to the Kenyan cement industry, the Authority observed significant challenges, including declining local demand, rising production costs, and

2

increasedexportsin2023,whichmaysignala shiftbyproducerstowardmore profitable external markets at the expenseof local supply.

64. The sector is dominated by established players such as Bamburi Cement, Mombasa Cement,EAPCC, Savannah Cement,ARM Cement (now National Cement),Rai Cement,Karsan Ramji & Sons (Ndovu Cement),and National Cement, alongside imports from Uganda, Tanzania, COMESA countries, and Asia.Risks ofunwarrantedconcentration arise from strategicinformation sharing,reduced innovation, coordinated behavior, and cross-directorships thatcreatebarriersfornewentrants. 2. 65.TheAuthorityemphasizedtheneedforcontinuoussurveillancetomonitor competition,protectconsumerwelfare,and ensure a levelplayingfield in this strategicallyimportantsector. 3. 66.In conclusion,theAuthority clarified that thereviewed transactiondid not constituteamergerasdefinedbytheActandthereforerequiredno notification or public interest review. However, the ongoing market study of the cement sector is expected to shed light on its structural, competitive, and operational dynamics, ultimately informing regulatory action to prevent anticompetitivepracticesandsafeguardconsumerandmarketinterests.

3. 5 Submission by Attorney General

TheAttorneyGeneral submitted that,

• Capital Markets Authority (CMA), the Competition Authority of Kenya (CAK), andtheCompanies Act,Cap486.
• 68.For CMA, the transaction must comply with the Capital Markets (Take-Overs than5% of voting shares in any one year while holding between 25% and50% of voting shares (i.e., exercising "effective control"). The company must announcetheproposed offer orseek anexemption fromCMA TheAttorney General isnotawarewhether these CMArequirementshavebeenmet or if approval/exemptionwasissued.

70. The Office of the Attorney General (AG)'s role is strictly limited to providing legaladvisoryifandwhenrequestedbyEAPC,andtheyhavenotbeen requestedtoorprovidedanyapprovals,opinions,orcertificationsregarding this matter.Consequently,the office is unaware of any steps taken for public participationorstakeholderengagement.Furthermore,sincetheofficehasnot beenprovidedwiththetermsofthetransaction,itisunabletoadvisewhether theproposedsaleprotectscitizensfromexploitationor loss of strategic assets,

• 69.For the CAK, the Authority must determine if the sale amounts to a merger byconferringdirectorindirectcontrolundertheCompetitionAct,andifso, apply the competition and public interest tests to approve, decline,or approve withconditions.UndertheCompaniesAct,thesalemustadheretothe company'sArticlesofIncorporationandcouldbesubjecttoexisting shareholders' pre-emption/right of refusal requirements,which can be modifiedorexcludedbyaspecialresolution.

71. The Attorney General confirmed that they are currently not aware of any ongoing or possible court challenges concerning the sale.The governance structureofEAPCshouldcomplywithitsArticlesofIncorporationand MemorandumofAssociation,readtogetherwiththeCompaniesAct.

3.6 Submission by Capital Markets Authority

CapitalMarketsAuthority'ssubmittedthat,

• 72.The proposed transaction stemsfromHolcimLimited's global strategy to exit certain African markets,whichpreviously resulted in the sale of itsbusinesses in Nigeria,Uganda,Tanzania,and Zimbabwe.In Kenya,Holcim,through subsidiaries, sold58.6%ofits shareholding inBamburi CementPlc toAmsons Industries (K) Limited in December 2024,which led to Amsons acquiring 100% of Bamburi following a mandatory takeover offer.

73. The current proposed transaction involves Kalahari Cement Limited acquiring 26,324,884 ordinary shares in EAPC, representing approximately 29.2% of the issued share capital, from Holcim's subsidiaries,Associated International Cement Limited(AlC) and Cementia HoldingAG.lf successful,this acquisition, combinedwith theI2.5%EAPCstake alreadyheldindirectlybyKalahari through Bamburi Cement Plc (a related company), will result in Kalahari and its relatedparties acquiring a controlling interest of approximately 41.7% in EAPC.Kalahari Cement Limited is a private company incorporated in Kenya asaninvestmentvehicle.

• 74.The CMA confirmed that the proposed transactionwas reviewed and an exemptionfromtheobligationtomakeamandatorytakeoveroffertoallEAPC shareholderswasgrantedtoKalahariundertheCapital Markets(Take-overs andMergers)Regulations2002.Amandatorytakeover offer is typically required when a person acquires"effective control"(25% or more of the issued sharecapital)inaListedcompany.
• 75.Kalahari sought the exemption on the groundsof being a strategicinvestor tied thepublicinterestbyassistingEAPCinachievingitsstrategicobjectives and deepening capital markets. Kalahari has also indicated that it does not intend todelistEAPCandplanstomaintainitsstatusasapubliclylistedcompanyto supportitslong-termgrowthandaccesstocapitalmarkets.

76. The CMA granted the exemption subject to two key conditions precedent, whicharealsoconditionsforthecompletionoftheSharePurchaseAgreement (SPA)

• i. Obtaining the requisite approvals from the Competition Authority of Kenya
• ii. Notification to,and approval of the material change by the Cabinet Secretary,Ministry of Mining,Blue Economy and Maritime Affairs,in accordancewiththeMiningAct
• 77.The agreedconsiderationfor the Sale Shares is Kshs27.30per share,which amounts to a total consideration of approximately Kshs 718,669,333.2(USD 5,565,340.10)TheCMAnoted that thisnegotiated price represents a

significantdiscountcomparedtothecurrentmarketvalue,whichhasbeen volatilepartlydue tospeculativetradingfollowingHolcim'sannouncedexit from Africa.

• 78.TheCMAalsoconfirmedthatalldisclosurestoshareholdersweremadein accordancewith theCapital MarketsActandtherelevantRegulations.Kalahari compliedwiththerequirementtomakeapublicannouncementandissuea Noticeof Intention,withrelevantannouncementspublishedintheDailyNation and EastAfricanStandard newspapers on August1,2025PORTLAND CEMENT PLC share price movement from May 2024 to August2025.

3.7. Submission by Ministry of Investment, Trade, and Industry State Department for Industry

79. EAPC PLC which is listed in the Nairobi Securities Exchange (NSE)and is owned by;

ThestateDepartmentforIndustry submitted that,

• i. National Social Security Fund -NSSF (27%);
• ii. National Treasury (25.3%);
• iii. Cementia Holdings (14.6%);
• iv. Associated International Cement (14.6%);
• v. Bamburi Cement (12.5%) and;
• vi. Others- traded at the NSE (6%).

7. 80.TheCementia HoldingsAGandAssociated International CementLimited are subsidiaries of the Holcim Group.The proposed sale of their shares to Kalahari Cement Ltd will result in acquirer holding 29.2% of the company's authorized shares. 8. 81.Additionally, the companymaintains a close associationwith Bamburi Cement Ltd,as outlined in the disclosure accompanying thenotice of intent regarding Holcim'sstake acquisitioninEAPCPlc. 82. EAPCC LTD comprises six members, out of which two of the members are nominatedbytheHolcimGroup,reflectinga longstandingpracticealignedwith its historical 41.7% ownership of the company's authorized and issued shares. Itisexpected that this levelofboardrepresentationwillbe availableto the acquireruponcompletionofthetransaction. 10. minorityshareholderandthegovernmentinterest. 84. There no shareholder agreement in place at EAPCC LTD. Government interestsarerepresentedontheBoardthroughthenominationoftwo directors,one from the National Treasury and another from the parent the Government of Kenya.Based on the above representation, the interest of government andminority shareholders in the company arewell takencare of.

TheMinistrynotesthatEastAfricanPortlandCementPlc(EAPC)isactively implementing its five-year strategic plan,running through June 2027,with notable progress already achieved.Pensioners'and taxpayersinterests are being addressed primarily through thepursuit of value via dividends. discounton theprevailingmarketvalue couldundermine theprogress already madeinaligningthecompany'sbookvaluewithitsopenmarketvalue.

86. The Ministry has, to date, received no engagement or communication from Kalahari Cement Ltd regarding its long-term strategic direction following the proposed acquisition.Consequently,MiTl currently has novisibility on the buyer's plans with respect to: Sustaining cement production in Kenya, protecting employment levels, wages, and benefits, ensuring alignment with governmentpolicyandsectoralgoals,andthemethodologyandbasisforthe share valuation. The Ministry, however, undertaKES to disclose this information to the Committee once a formal engagement avenue is established. 88. The Ministry confirmed that engagements between Kalahari Cement Ltd and theHolcimGroupfalloutsideitspurview.Accordingly,MlTl isnotinaposition toprovide details on the due diligence conducted in relation to the proposed transaction. 87. The Ministry noted that the Company is pursuing its strategic plan through June2027,with significantmilestones already achieved.Key initiatives include: Balancesheetrestructuringthroughthedisposalofinvestmentpropertyat marketvaluetoreduceliabilities,Reinvestmentinplantrefurbishmentto enhance operational capacity,and A long-termgoal of capturing a 30%market share.These measuresprovide safeguards againstundervaluation andmitigate risks ofassetstripping. 4. 89.AdditionalInformationfortheCommittee. 5. The Ministry wishes to highlight that EAPC is currently experiencing a period of stable and sustainable growth following a significant turnaround. MITI continues to oversee the company's strategic plan, which is closely aligned with national development priorities, including the Affordable Housing Program and infrastructureexpansion. 6. 90.TheMinistryunderscoresthatEAPC'sreturntoprofitabilityanditspositive growth trajectory reflect the collective efforts of all stakeholders. The primary objective remains ensuring this momentumis not disrupted,thereby safeguardingshareholdervalue. 91. MITl has confidence in the existing regulatory frameworks overseen by the (CAK) to review and regulate any corporate actions. The Ministry respectfully submitsthattheCommitteetakeintoaccounttheimportanceofstabilitywhile allowing established regulatory processes to proceed.

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CHAPTERFOUR

4.1COMMITTEEOBSERVATIONS

TheCommitteeobserved as followswithrespect to theterms of reference-

1. To examine the applicable legal framework transaction's compliance with the Companies Act, the Capital Markets Act, the CompetitionAct,and otherapplicable laws 2. 92.The Committee observed that the transaction of transferof shares in EAPC Plc as a public listed company in Kenya is governed by the Capital Markets Act, the Companies Act, the Competition Act,the Mining Act together with the relevant subsidiarylegislation. 3. 93.Inparticular,therelevantcapital marketprovisions are-

• i. Section31(1A)of theCapital MarketsAct andRegulation84(c)of the Capital Markets (Public Offers,Listing and Disclosure Regulations) 2023, which require approval of CMAwhere there is a transfer of securities outsidetheSecuritiesExchange;
• ii. The eligibility requirements stipulated under the Capital Markets (Public transferabilityof listedsecurities;
• iii. The Capital Markets (Take-Overs And Mergers) Regulations, which are triggered when a person acquires more than 5% of voting shares in any one year while holding between 25% and 50% of voting shares (i.e., exercising"effectivecontrol").

94. The Committee observed that a person who has acquired effective control in a listed company is required to follow the following procedure- 8. Issue apublicannouncement. 11. Prepare,publish and serve a Notice of Intention on CMA, the Exchange, the listed company as well as the Competition Authority of Kenya.

• iii. ApplyforanexemptionunderRegulation5oftheCapitalMarkets (Takeovers and Mergers)Regulations2002,whereherenotakeover of othershareholdersisintended.

11. 95.The Committee observed that effective control is attainedfromownership of 25% oftheissuedsharecapitalandabove. 96. With respect to competition law, the Competition Authority of Kenya must determine if the sale amounts to a merger by conferring direct or indirect control under the Competition Act, and if so, apply the competition and public interest tests toapprove,decline,orapprovewithconditions. 97. Under the Companies Act, the sale must adhere to the company's Articles of Incorporation or other governing instruments.

• 98.With respect to the Mining Act, the relevant provisionisSection51(6)and (7) of the Mining Act, 20l6, which govern transfer or assignment of mineral rights. It providesthatatransferorassignmentofamineralrightmustbeapprovedbythe CabinetSecretary.
• permissible,waiverofthefollowingconditionsprecedent-
• i.Receipt of approval from the Competition Authority;
• ii. The granting by the CMA of an exemption to Kalahari under Regulation 5 of the Capital Markets (Takeovers and Mergers) Regulations 2002, exempting Kalahari Ltd from the obligation tomake a mandatory takeover offertoEAPCshareholderswhereKalahariafteracquiringsignificant shareholdinginthecompanydoesnot wishtobuyoutother shareholders.
• ili. With respect to EAPC's mining licence, notification to and receipt of written approval from theCabinetSecretaryfor theMinistryofMining, Blue Economy and Maritime Affairs,in accordance with Sections51(6)and 51(7)oftheMiningAct;
• iv.Receipt fromCMAof approval under section 3I of the CMA Actfor Kalahari Ltd to implement the transaction as a private transfer; and
• V. Should Kalahari opt to finance anyportion of the consideration rather thanpay itfully incash,it shallprovidethe sellerswith anunconditional, irrevocable,on-demandguarantee.
• 2.To scrutinize the process followed in the proposed share sale, including the role of the National Treasury, the Capital Markets Authority (CMA), the Competition Authority of Kenya (CAk), and the Office of the Attorney-General, particularly with respect to approvals issued and legal advice provided
• 100.Kalahari Cement Limited entered into a Share Purchase Agreement dated 31 July2025,underwhichKalahariCementLimitedwillacquirethefollowing-
• (a) 13,144,442 ordinary shares in EAPC (representing 14.6% of the issued share capital) from Associated International Cement Limited (AiC), a companyincorporatedunderthelawsofEngland;and
• Cementia Holding AG, a company incorporated under the laws of Switzerland.
• 101.Holcim Limited is the ultimate beneficial owner of the 26,324,884 ordinary sharesinEAPCapproximately29.2%ofthe issuedsharecapital,heldthrough theabove-named subsidiariesAiCandCementia(thesellers").
• 102.Kalahari Ltd served the Capital Markets Authority (CMA) with a Notice of Intention underRegulation 4(1) on31 July2025.

2

• 103.The National Treasury is key shareholder in EAPC Plc and CMA advised the CommitteethatKalahariLtdindicatedthatitdidnotintendtodelistEAPCbut to maintain it as a publicly listed company, citing benefits of access to equity and debt capital markets and broad investor participation in the growthof the cementsector.
• 104.The Office of theAttorneyGeneral indicated that itsrolewasprovision of
• 105.With respect to the specific regulators, their roles are as below-
• (i) Capital Markets Authority

106. The Committee observed that the prerequisite documents as per the Regulations arean announcement to shareholders and issue of a Notice of Intention which is also published in the newspapers. CMA confirmed that Kalahari compliedwith theserequirements and the Committee observed that the Notice of Intention was published in the Daily Nation as well as the Standard newspapers on August I", 2025. 107. The Capital Markets Authority advised that with respect to the transaction under scrutinytheNoticeofIntentionbyKalahari Ltdindicatedthatthepurchaserdoes not intend to takeovershares held byother shareholders therefore thereisno Listedcompany 108. Kalahari Ltdwasthereforerequiredtoseekan exemptionunderRegulation5of the Capital Markets (Takeovers and Mergers) Regulations 2002 and the grounds uponwhich the exemption maybegranted are listed undersubregulation 2.

• 109.CMA confirmed thatKalahari Ltd sought an exemption from CMA pursuant to Regulation 5(2) on the grounds of being a strategic investor in a listed company that is tied up with management or other technical support relevant to the business is a strategic partner with technical and managerial support and does not intend to takeover.
• ll0. The CMA confirmed that the proposed transaction was reviewed and an exemptionfromtheobligationtomakeamandatorytakeoveroffer toallEAPC shareholders was granted to Kalahari under the Capital Markets (Take-overs and Mergers)Regulations2002onAugust5th2025.
• Ill.The CMA also required Kalahari Ltd to obtain the requisite approvals from the Competition Authority of Kenya and the Cabinet Secretary, Ministry of Mining, Blue Economy and Maritime Affairs as per Sections 51(6) and (7) of the Mining Act, whichwerebothsubsequentlygranted.
• I12. CMA was also required to grant an approval under section 3l of the CMA Act for thetransactiontobeimplementedas aprivate transfer.

(ii) Competition Authority of Kenya

• I13.TheCommitteeobservedthatCAK'scoremandateincludesregulatingmarket Kenyan economy,with theanalysisfocusingonpotential impacts oncompetition andpublicinterest.Thisis intendedtoregulatemarketstructurebyreviewing mergersandtakeoversinordertosafeguardcompetitionandpublicinterest.This mandate includes assessingwhether a transactionis likelytosubstantially lessen competition,result in dominance,restrict trade,orharm consumers and small undertakings.
• I14.The Committee observed thatunder the Competition Act,Cap504,a merger is when one undertaking directly orindirectly acquires or establishes control over thewholeorpartofanotherundertaking'sbusiness.
• I15.The CAK received a notice of intention to acquire these shares on July 3l,2025, and a subsequent request for an advisory opinion on August 13, 2025 per Rule 14 of the Competition (General) Rules,2019.The Authority concluded in its advisory opinion that the proposed acquisition does not amount to a merger because the 41.7%shareholdingwill notresult ina changeofcontrolof thetargetundertaking, nor do the shares confer anyveto rights that would amount to indirect control. Consequently,in CAK's determination, the transaction does not require notificationbefore its implementation underSection 43(l)of the Act.
• 116.As a result,the CAK indicated that it was legally constrained from conducting a competition andpublicinterest assessment asperSection 42 of the Act.
• 3.To assess the potential alteration ofcorporate control and evaluate measuresin place tosafeguard the interests ofall shareholders,particularly the Government (National Treasury), pensioners (NsSF), and minority investors.
• I17.The current shareholding structure of EAPC PLCis:National Social Security Fund (NSSF) (27%), The National Treasury (25.3%), Cementia Holdings AG (14.6%),Associated International Cement Ltd holds(14.6%),BamburiCement Ltd(12.5%),while minority shareholders hold 6%;
• I18.Cementia Holdings AG and Associated International Cement Ltdare subsidiaries of Holcim Groupgivingit a 29.2%stake inEAPCPLC;
• 119.Kalahari Cement Ltd is a major shareholderinBamburi Cement Ltdwhich holds 12.5%shares inEAPCPLCand byvirtue of thatassociation,the transaction wouldresultinacombinedinfluenceof41.7%byKalahariCementLtd;

120. Regarding board representation, two of the five directors representing shareholdersarecurrentlynominatedbytheHolcimGroup;

121. The Government of Kenya appoints directors to represent the National Treasury, the Parent Ministry, NSSF, the minority shareholders, and a Chairperson appointed by the President 2. 122.EAPC PLC stated that there are no formal shareholder agreements currently in place. 123. The Committee observed that the First Schedule to the Capital Markets (Public Offers,Listings and Disclosures)Regulations 2023,LN172 of 2023 requires that Securities to be listed shall be fully paid up, freely transferable with no 4. 124.TheBoard of EAPCraised concerns thatpost-transaction,thebeneficial owner wouldexercise influenceover a combinedstakeof approximately41.7%in EAPCPlc.In itsview,while the29.2%acquisitionalone sitsbelowthe 30% of whether parties are"acting in concert" and 'common control'. 5. 125.The committee observed that"common control"means shares areultimately held by the same owner,and "acting in concert" means coordinated action between shareholders.Both are anti-avoidance concepts that are designed to prevent shareholdersfrom sidestepping takeover rulesby splitting staKES or workingbehindthescenes. 6. 126.Thecommitteefurtherobserved thatinthatcase,givenKalahariis theultimate beneficial owner of Bamburi Cement(which is a shareholderinEAPCPlc) it may not be able to argue that each stake is"independent"hence regulators wouldtreatthemasone.Ordinarily,thisshouldforceamandatorytakeoverbid toallothershareholdersinordertoprotectminorityinterests. 7. 127.In this case,Kalahari Ltd indicates that it does not intend to acquire the shares ofothershareholdersandsought anexemptionunderRegulation5(2)of the strategicinvestorandnotpursuingatakeover. 8. 128.The CAK submitted that the transaction does not amount to a notifiable merger for under Section 43(l) of the Act before its implementation since it does not confercontrolintermsofvetorightsordecisiveinfluence. 129. The Government of Kenya holds 25.3% of EAPC Plc directly through the National Treasury. The National Treasury, acts as a major shareholder, corporate action (such as share transfers, board restructuring, or strategic partnerships)alignswithnationalinterests. 3. On the proposed consideration and the methodology used to determine thevalue of theshares

• 130.The Committee observed that proposed consideration for the transaction is Kshs. 27.30 per share. On the I" August 2025, a day after Kalahari issued the Notice of Intention,the share price stood at Kshs.50.75 rising to Kshs.58.75 by 2nd
• 131.TheEAPCPLCBoardofDirectorsindicatedthattheproposed transactionisa private salebetween Holcim Group (throughits subsidiaries Cementia and Associated International Cement)and Kalahari Cement Ltd.Assuch,EAPCPlc was not a party to the valuation or negotiationprocess and therefore the EAPC Plcdidnothave access to thespecificvaluationmethodology used.
• 132.TheEAPCPlcBoard'sfurther expressed concern that the transactionprice of KES 27.30per share is significantlybelow the prevailing marketvalue.Itreiterated its fiduciarydutytosafeguard all shareholdersbyensuringthatthecompany'sintrinsic value is reflected in its performance,noting that its five-year strategic plan on deliver thisvalue.
• 133.The Committee noted thatthe Board compliedwith disclosure obligations by publishingtheNoticeofIntentionthroughtheNairobiSecuritiesExchange.

134. .The Principal Secretary for Investment stated that he did not consider the transaction price a cause for concern,describingit as a matter between a willing buyerandawillingseller 135. The CMA role may not enable it to judge the price but it is to ensure full and fair disclosureand toensurethereisnoinsidertradingormarketmanipulation.Such disclosureallowsfor shareholderstotakedecisionsregardingtheirshareholding. Inthis case the transactionprice is material information thatrequires to be disclosedundertheCMArules. 4. To inquire into the anticipated impact of the proposed sale on the company's employees, customers, the broader public, and national industrial policy.

• Kalahari Cement Ltd regarding its strategicplansfor the companypost acquisition.
• 137.As a result, the buyer'slong-term plans,employment levels,wages,benefits,capital andunknown.
• 138.The CompetitionAuthority did not undertake apublicinterestreviewof the transactionhencethesafeguardsarenon-existent.
• 139.EAPC Plc has expressed a desire to buy back the shares proposed to be sold by HolcimGroupintheinterestofthecompanyandthebroaderpublic.The committee observed that under Section 447 of the Companies Act,2015,a company limited by shares may purchase its own shares out of distributableprofits or througha freshissue of shares,subjecttoshareholder approval by special

• resolution andcompliancewithdisclosureandsolvencyrequirementsprescribed by the Act.

140. in accordance with the submission under paragraph i39, the Committee observed that the EAPC Plc proposal is morethan a routine corporate action.It brings policy underthePrivatizationAct. 141. In accordance with the submission under paragraph 139, the Committee observed that the two-stage process involving a company buy back followed by a public offer is an effective approach.It transfers ownershipfrom a single foreign shareholder to many Kenyan investors. It also promotes wider economic participation and local ownership. 142. In accordance with the submission under paragraph I39, the Committee observed programme of theNational Assembly.lt convertspolicy objectives ofprivatization intopracticalresults. 143. In accordance with the submission under paragraph 139, the Committee observed that the transaction structure preserves the listing of the EAPC Plc and stability whilepromoting thenationalgoalsof inclusiveownership andcapitalmarket growth.

4.2COMMITTEEFINDINGS

Based on the above observations, the Committee finds that-

1. The proposed transaction and the approvals process was subject to multilayered regulation under the Capital Markets Act (Cap. 485A), the Competition Act (Cap. 504), the Companies Act, (Cap. 486), and the Mining Act, (Cap 306), which seek to protect investors, ensure fair competition, and safeguardnationalmineralresources; 2. Owingtothecomplexmulti-layeredregulatory framework,regulatorsmust 3. 3.The transaction therefore required approvals or exemptions from the Capital Markets Authority (CMA) including approvals under Section 3I(IA) of the Capital MarketsActand therelevant subsidiary legislation,the Competition Authority of Kenya (CAK),and the Cabinet Secretary for Mining under Sections 51(6)-(7) of the Mining Act for the transfer of a controlling interest ina licensee; 4. 4.CAK did not conduct a merger review as provided for under sections 42-47 oftheCompetitionAct,having concluded thatthe transactionwas nonnotifiable.Consequently,no public interest or competition assessment was undertaken;

• 5.CAKhasneitherdeterminedmarketconcentrationordominancerisksin cementsectororrisksofdominancenorassessedwhetherthetransaction may lessen competition in production,distribution and pricing;

6. CAK has not determined whether the transaction can proceed without public interest or conflict with national industrial policy, as required under the publicinteresttestinSection46(2)(a)to(c)oftheCompetitionAct;

• 7.The CAK has not determined whether the transaction constitutes a restrictive trade practicewithin the meaning of Section 21of the CompetitionAct,which prohibits agreements,decisions,or concerted practices between undertakings in trade.
• 8.Kalahari Cement Ltd through its combined interests in Bamburi Cement could command a substantial share ofKenya's cementproduction and distribution capacity.This could leadtohorizontal coordination andcollective dominance where two or more undertakings, acting in concert, control the market even if neither individuallyholds over50%+market share.CAK has not determined marketconcentrationincementsectororrisksofdominanceinproduction, distribution andpricing;
• 9.The absence of afull competition andpublicinterestreviewby CAKleavesa regulatory vacuum, particularly in a sector that is strategic to Kenya's economic transaction to ensure that the transactiondoes not harm competition, employment,orpublicwelfare;
• 10.Regulation 5(2) of the Capital Markets (Takeovers and Mergers) Regulations 2002providesCMAdiscretiontoexemptanacquirerfrommakingatakeover offerwhere the transactionservespublicor marketinterest.The CMA must therefore ensure that any exemption granted under this provision is balanced bysafeguardsthat protect minority shareholders andupholdinvestor confidence;
• 1l.Adetermination by CMA as towhether to grant an exemptionunder 2002 must go beyond the applicant's declaration and CMA must objectively test the investor's intention, technical competence, strategic capacity, and track record;
• of the Capital Markets (Take-Overs and Mergers) Regulations,2002, minority shareholdersremainexposedtoinfluencefromadominantbeneficialowner. Unless carefully conditioned, any approval or exemptions granted by CMA couldundermineconfidenceintakeoverrulesandinvestorprotection;

• 13.Itisunclear whetherCMAsatisfied itself thatthereisno creepingtakeover, that is,an incremental acquisition resulting in effective control in disguise and further whether minority sharehoiders are being prejudiced.
• 14.Kalahari Ltd's current declaration that it doesnot intend to takeoverEAPC or acquirecontroldoesnotprecludefutureacquisitionsorpublicoffersthat couldconferitwitheffectivecontrolormarketdominance,potentially distortingpricing,investmentinflows,or industrial competition.

15. The transaction price of KES 27.30 per share rests substantially below the prevailing NSE market price of approximately KES 58.75 suggesting possible undervaluationanderosionofshareholdervalueincludingthegovernment's ownequitystake

• 16.No independentvaluation report or fairnessopinion has been furnished to justify the transaction price, raising questions about the methodology used to determinesharevalueandtherationaleforthesale

17. Reliance on the principle of "willing buyer-willing seller" is inadequate where a listed company of strategic national importance is concerned, as public integrity,investorconfidence,andprotectionofpublicassets.

• 18.Pastprivatizations demonstrate that undervalued disposals of strategic assets haveresultedinpubliclossandassuch,arecurrencemustbeguardedagainst topreservepublicresources.
• 19.Thelarge off-market disposal block sale well below the prevailing NSEtrading levels may trigger market distortion a speculative trading as investors may query whether the market is overvalued or whyHolcim is selling at a"loss' hence shaking confidence in EAPCC value.This may potentially lead to sharp downwardcorrectionontheNSEwhichultimatelyunderminesinvestor confidenceintheNSE andKenya'sCapital Markets.
• 20.While Section 31(1A) of the Capital MarketsActrequires CMA's approval for any transfer of securities outside the Exchange, such approval relates to the legality and transparency of the transfer. However, where transaction prices deviatesignificantlyfromprevailingmarketlevels,CMAshould,beforegranting approval,requireadequatedisclosureofvaluationmethodologyandensure there isnomarketmanipulation orinsider trading,consistentwithRegulations Il1-ll4 of the Capital Markets (Public Offers,Listing and Disclosures) Regulations,2023.
• 21.There is a credible risk that non-core assets,includingland,could be subject to asset stripping if adequate safeguards are not put in place.

22. The National Treasury and NSSF,as major shareholders, have a fiduciary duty tosafeguardpublicinvestmentandpensionersmoneysbyensuringthatany future capital restructuring or disposal or sale of assets (e.g. land) is properly disclosedandapprovedinaccordancewithSections158and238the CompaniesAct

Reportof theDepartmental CommitteeofTrade on theinquiry into theproposedsaleof sharesinEastAfrican PortlandCementPlc

• housing agenda, and the stability of EAPC Plc serves and bear a significant public interest.
• 24.Cement and associated limestone deposits constitute a strategic sector for national development with direct implications for infrastructure, housing, and industrialgrowth.
• 25.Whereas the entry of a long-term strategic investor may be beneficial to the company by injecting capital and providing technical support, and operational efficiency,the absence of a publicly disclosed strategic plan fromKalahari Ltd alignmentwithnationalindustrialpolicy;
• 26.The absence of apublic interest reviewbyCAKunderSections 42-47of the CompetitionAct,means thatnosafeguardsorconditionshavebeenimposed to protect public interest, consumer welfare and leaving potential risks of market concentration,dominance,and pricing control in the cement sector unmitigated;
• 27.Specifically,without a public interest assessment, there are no safeguards to protectemployment,including the job security and labour conditions of employeesatEAPCandwithinthewidercementvaluechain;Consumers,who could be exposed to higher cement prices arising from possible market coordinationordominance;Small and MediumEnterprises(SMEs)involvedin distribution and related construction supply businesses, who could face reduced market access or discriminatory trading conditions; and National materials,competitive domestic production,and sustainable exploitation of strategicmineral resources.
• theinterestofthecompanyandforthebroaderpublic.Buy-backofcompany shares is possible under Section 447of the Companies Act,2015 which distributableprofits or through a freshissue of shares,subjectto shareholder solvency requirements prescribed by the Act.
• 29.The continued listing of EAPC Plc in theNairobi Securities Exchange is beneficial as it enhances transparency, facilitates access to capital, and allows widerinvestorparticipation.
• 30.The Committee noted that the existinglegal frameworkgoverning off-market share transfers,takeovers,and mergers of public listed companies under the Capital Markets Act and the Capital Markets (Takeovers and Mergers) Regulations,2002,lacks explicit provisions for exercise of pre-emptive rights transparentsalemechanismswhere significant shareholdingin a listedpublic

Reportof theDepartmental Committeeof Tradeontheinquiryintotheproposedsaleof sharesinEastAfrican PortlandCementPlc companies,particularlythose of strategicorpublicinterest,torisks ofopaque transactions,insider arrangements,and erosion of shareholder and public value.A harmonised legislative framework would strengthen market integrity, investorconfidence,andfairnessincapitalmarkets.

31. From the submission proposing EAPC buys back its shares, the Committee finds that in respect to the Legal Framework, section 447 of the Companies Act,2015 allows a listed company such as EAPC Plc tobuyback its own shares. The lawrequiresthat thebuybackbefinancedfrom distributableprofits or from the proceeds of a fresh issue of shares.It also requires approval of shareholders througha specialresolution andcompliancewith alldisclosure and solvency rules to protect creditors and investors. (see paragraph /39 of the Report) 32. From the submission proposing EAPC buys back its shares, the Committee finds thatinrespect tothe alignmentwithNationalPolicy,EAPCPlc appears onthePrivatizationProgramme2023-2028approvedbytheNational Assembly andpublished in theKenya GazetteSpecial IssueVol. 78 No. 2l of 15 March 2023. This inclusion shows government intends to reduce state ownership and promote private participation in the company. 34. From the submission proposing EAPC buys back its shares, the Committee observed that in respect to the strategic economic benefits, the proposed transactionsupports theobjectivessetoutunderSection6of thePrivatization Act(No.18of2025).Itwillbroadenownershipintheeconomybyencouraging privateinvestmentundersection6(c)ofthePrivatizationAct.Itwillalso enhance and develop the capital markets underSection 6(f)of thePrivatization Act through new public shareholding and increased market activity. 33. From the submission proposing EAPC buys back its shares, the Committee finds that in respect to the advancement of public policy goals, the proposed transactioninwhichEAPCPlcbuysbacksharesfromHolcimGroupandlaten offers them to the public supports the objects of the Privatization Act, 2025 (No. 18 of 2025). Section 5(c) of the Act promotes public participation in the sustainabledevelopmentandprotectionoftheeconomy.Theplanwillallow Kenyans tohold a direct stake in an important industrial enterprise.

4.3COMMITTEERECOMMENDATIONS

91. The Committee, having considered the submissions made by stakeholders and the evidence presented during its inquiry into the proposed sale of shares held by Holcim Limited in East African Portland Cement PLC (EAPC Plc) to Kalahari Cement Limited, and having reviewed the applicable laws and regulatory framework, makesthefollowingrecommendations-

• 1.KalahariCementLimitedshouldsubmitawrittenundertakingto thecurrent shareholders, business partners and staff of East Africa Portland Cement, Plc, s strategicplanincludingacommitmentthatKalahariCementLimitedwillnot causeassetstrippinganddisposalofnon-coreassets.
• 2.TheCompetitionAuthorityofKenya should,withinsixty(60) days,conducta comprehensive public interest and competition assessment of the cement industry in Kenya and submit areport to theNational Assembly.The review should determine market concentration levels,risks of dominance or coordinated conduct, pricing trends, and the adequacy of existing safeguards foremployment,SMEs,andconsumers
• 3.TheBoardofDirectorsofEastAfricanPortlandCementPlcmayevaluatethe feasibility of implementing a share buy-back programme under Section 447 of the Companies Act. The evaluation may consider the buying back of shares proposed to be sold by Associated International Cement Limited (AlC) and CementiaHoldingAG,asalawfulmeansofstabilisingownership,preserving shareholder value, and safeguarding public interest in a strategic national enterprise.
• 4.The Board ofDirectors of East AfricanPortland Cement Plc should,within sixty(60)days,reviewitsMemorandumandArticlesofincorporationtoalign them with the Companies Act, the Capital Markets Act and current best corporategovernanceandbusinesspractices.
• 5.In view of the legislative gaps identified with respect to transfer of shares in public companies listed in the Nairobi Securities Exchange, the Committee recommends that the National Treasury inconsultationwith the Capital MarketsAuthorityshouldundertakealegislativeauditoftheCapitalmarkets Act, the Capital Markets (Takeovers and Mergers) Regulations, 2002, and present a legislative proposal to-
• a.provide for exercise of preemptive rights in the sale and transfer of sharesofapubliclistedcompanythroughprivatesale;
• b.introduce competitivebiddingfor thepurchaseof shares among existingshareholders
• 6.PursuanttothefindingsandobservationsontheproposalbyEAPCPlctobuy back its shares,the Committee recommends that theNational Assembly resolvesthatEAPCPlcbuysbacksharesfromHolcimGroupandofferthem transactionalignswiththePrivatizationPolicyinKenyaandwilldeliverclear publicbenefits.
• 7.Pursuant to the recommendation under.paragraph 6,the Committee recommends thattheNational AssemblyresolvesthattheNational Treasury, the Capital Markets Authority, the Privatization Authority and any other

relevant agencies give regulatory guidance and approvals to enable smooth and lawfulexecutionofthetransaction.

8. Pursuant to the findings and observations on the proposal by EAPC Plc to buy back its shares,the Committee recommends that the National Assembly resolvesthatEAPCPlcbuysbacksharesfromHolcimGroupandofferthem tothepublicthroughafreshInitialPublicOfferingonthebasisthatthe transaction aligns with thePrivatizationPolicyinKenya andwill deliver clear publicbenefits. 2. 9.Pursuant to the recommendation under paragraph 6, the Committee recommends thattheNational Assemblyresolvesthat theNational Treasury, theCapital Markets Authority,the PrivatizationAuthorityand any other relevant agencies give regulatory guidance and approvals to enable smooth and lawfulexecutionofthetransaction. 10. In relation to criteria for determining dominant position, CAK should be directed toimmediately calculate and disclose the currentmarket shares of EAPC, Bamburi Cement, and other major players to properly assess if the postSection 23. 4. I1. In relation to criteria for determining dominant position, the mandate dominance,evenfortransactions thatdidnotmeet thenotification threshold. The Authority should proactively investigate whether this consolidation of shareholding under a single beneficiary creates a de facto dominant position. 12. In relation to criteria for determining abuse of dominant position, CAK should use its powers under Section 24 of the Competition Act to initiate aninvestigationintotheconductofthecommonlycontrolledEAPC-Bamburi plantinvestmentdecisions,andmarketallocation. 13. In relation to criteria for determining abuse of dominant position as KalahariCement shouldberequired to submit andpublicly disclose alegally binding memorandum on its strategic plans for EAPC,guaranteeing operational independence, continued investment, and non-collusion with Bamburi Cement. 14. In relation to abuse of buyer power, the ongoing market study being undertakenbyCAKofthecementsectorshouldexplicitlyincludeananalysis ofbuyer power inthe chain of supplyofthe sector to identify andprevent potentialfutureabusesunderSection24A.

Signature..!

Date..

HON.BERNARDMASAKASHINALI,MP CHAIRPERSON,DEPARTMNETALCOMMITTEEONTRADE, INDUSTRYANDCOOPERATIVES

REPUBLICOFKENYA

THENATIONALASSEMBLY

THIRTEENTHPARLIAMENT-FOURTHSESSION-2025

DIRECTORATEOFDEPARTMENTALCOMMITTEES

DEPARTMENTALCOMMITTEEONTRADE,INDUSTRYANDCOOPERATIVES

ConlicleratonandAdopalonOffrepoctonfePoposed Shares 4lins ADOPTIONSCHEDULE

SakoJEAR

| No. | MEMBER NAME | SIGNATURE | |-------|--------------------------------------------------|-------------| | I. | Hon.Benard Masaka Shinali,MP-Chairperson | | | 2. | Hon. Kitany Marianne Jebet, MP -Vice Chairperson | | | 3. | Hon.Dr. Oundo Wilberforce Ojiambo, MP | | | 4. | Hon.Adagala Beatrice Kahai, MP | | | 5. | Hon. Githinji Robert Gichimu, MP | | | 6. | Hon. Kamene Joyce, MP | | | 7. | Hon.Mwalyo Joshua Mbithi Mutua, MP | | | 8. | Hon.Oluoch Anthony Tom, MP | | | 9. | Hon.Guyo Adhe Wario, MP | | | 10. | Hon. Korir Adams Kipsanai, MP | | | I1. | Hon.Maina Mwago Amos,MP | | | 12. | Hon.Sakimba Parashina Samuel,MP | | | 13. | Hon. Alfred Kiprono Mutai, MP | | | 14. | Hon.Michael WainainaWambugu,MP | | | 15. | Hon. John Bwire, MP | |