Corporate Law | Business Litigation | Africa

Introduction: A Deal Under Legal Fire

In a high-stakes corporate litigation unfolding in Lagos, Lafarge Africa Plc has failed in its attempt to block a lawsuit that could stall or potentially derail its controversial sale to Chinese multinational Huaxin Cement Ltd. A Federal High Court judge sitting in Lagos recently rejected Lafarge’s motion challenging the court’s jurisdiction, allowing a shareholder suit brought by a Nigerian company and equity stakeholder to proceed.

The decision signals growing judicial willingness in Nigeria to entertain legal challenges to multinational M&A deals—particularly when shareholder rights and domestic corporate control are in question.

Background: The Contested Sale

Lafarge Africa Plc—one of Nigeria’s largest cement producers and a subsidiary of the Swiss-French multinational Holcim Group—announced its intention to divest its remaining operations to Huaxin Cement Ltd, a state-affiliated Chinese industrial conglomerate. The transaction, valued in the hundreds of millions of dollars, is part of Lafarge’s broader strategic retreat from sub-Saharan Africa.

But not all stakeholders support the exit. A Nigerian company and registered shareholder—whose identity has not yet been officially disclosed in court filings—filed suit seeking to stop the sale, citing concerns over:

• Lack of transparency in the divestment process
• Breaches of shareholder rights
• Potential violations of Nigerian corporate and competition law

Lafarge’s Jurisdictional Challenge—and Its Failure

In response, Lafarge filed a preliminary objection, arguing that the Federal High Court lacked jurisdiction to hear the case. The company contended that:

• The dispute was a matter of internal corporate affairs, best resolved at board level or by regulatory bodies such as the Securities and Exchange Commission (SEC) or the Corporate Affairs Commission (CAC)
• The plaintiff lacked locus standi (legal standing)
• The claim was speculative, as the sale had not yet been finalized

However, Justice Yelim Bogoro, presiding over the matter, dismissed Lafarge’s application. The court found that:

• The plaintiff had sufficiently demonstrated a justiciable interest as a shareholder
• Questions regarding breach of fiduciary duties, lack of due process, and corporate governance are within the purview of the courts
• Nigerian courts may intervene in pending M&A deals when shareholder rights or regulatory compliance is plausibly at issue

The ruling aligns with prior jurisprudence emphasizing judicial oversight in significant corporate transactions—particularly those involving potential loss of domestic control or antitrust implications.

Legal Implications of the Court’s Decision

The Federal High Court’s refusal to strike out the case sends a clear message: Nigerian corporate transactions—especially those involving foreign buyers—are not immune from legal scrutiny.

1. Affirmation of Shareholder Standing

The court’s acceptance of the shareholder’s standing reinforces Nigeria’s evolving legal framework on minority shareholder rights. In an era of increasing foreign divestments and mergers, the judiciary appears more willing to:

• Uphold statutory protections under the Companies and Allied Matters Act (CAMA) 2020
• Recognize the right of shareholders to seek injunctive relief before transactions are consummated
• Enforce transparency and fiduciary duties in publicly listed companies

2. Broader Regulatory Oversight of M&A Deals

While regulators such as the Federal Competition and Consumer Protection Commission (FCCPC) and SEC remain key players in M&A review, this case illustrates that regulatory approval is not necessarily the final word.

Judicial review may extend to:

• Alleged procedural lapses in shareholder notification and voting
• Violations of listing rules or market disclosure requirements
• Anticipated anticompetitive effects or national interest concerns

What Happens Next?

With the jurisdictional hurdle removed, the substantive hearing of the case will proceed, likely placing Lafarge Africa’s deal with Huaxin under intensified legal and public scrutiny.

Key issues the court may examine include:

• Whether the board of directors complied with disclosure obligations
• Whether the transaction undervalued Lafarge’s assets or undermined minority shareholders
• The extent of regulatory compliance and public interest consideration

Meanwhile, the transaction’s timeline is now in question. Lafarge and Huaxin may be forced to pause implementation until the court resolves the suit—or consider renegotiating deal terms in a manner more favorable to Nigerian stakeholders.

Regional and Global Significance

This case represents more than a local shareholder dispute. It reflects growing tensions between foreign direct investment and national economic sovereignty, especially in sectors like infrastructure, extractives, and heavy industry.

Legal analysts expect the ruling to:

• Encourage greater due diligence by multinational acquirers in Africa
• Prompt Nigerian corporations to enhance governance and shareholder engagement in M&A processes
• Serve as a judicial precedent for restraining cross-border transactions lacking robust domestic oversight

Conclusion: A Cautionary Tale for Multinationals

Lafarge Africa’s failed jurisdictional challenge is a wake-up call for corporations pursuing foreign-led exits or acquisitions in emerging markets. In Nigeria, the courts are signaling a willingness to protect minority shareholders, enforce procedural fairness, and intervene in high-impact corporate transitions.

As Lafarge now faces a full trial, the future of its deal with Huaxin Cement hangs in the balance—along with broader questions about who gets to control Nigeria’s industrial future, and on whose terms.