SEBI has approved the restructuring of Ambuja Cements, a process that was proposed by the company’s Switzerland-based parent, Holcim, in July.
The market regulator now has the power to approve mergers and acquisitions, unlike in the past, when only High Court approval was required for mergers or de-mergers.
In July, Holcim, which also owns ACC, announced that it would merge holding firm Holcim India with Ambuja Cements in a cash and share deal worth Rs 14,500 crore. As part of the process, Holcim India’s stake of over 50 per cent in ACC will be transferred to Ambuja, which will pay Rs 3,500 crore for 24 per cent and issue shares for the rest. Holcim’s stake in Ambuja will rise to 61.39 per cent — from a little over 50 per cent — after the merger of Holcim India with Ambuja.
Deal benefits
While most investors approved the valuation of $115 a tonne, they had reservations over transfer of cash to the parent company.
Speaking to Business Line , G. Anantharam, Vice-President (Treasury and Investor Relations), Ambuja Cements, said the senior management held meetings with several shareholders and had conference calls with all the major foreign financial institutions to explain the benefits of the deal. Most foreign and domestic financial institutions are now convinced, he said.
“We have SEBI clearance and called for approval from investors through postal ballot, which will be completed by the third week of November. We hope to complete the entire restructuring by June next year,” he said.
The company has already applied for clearances from the Gujarat and Delhi High Courts and the Foreign Investment Promotion Board.
This will be the first deal under new regulations that make shareholder approval mandatory for all merger and de-merger transactions in case shares are issued to promoter entities, parent companies, related parties or any of their subsidiaries or associates.
After restructuring, Ambuja expects to make a substantial saving through the common management structure, with two CEOs steering the companies under a Managing Director.