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UltraTech Cement, an Aditya Birla Group flagship, will acquire a 32.72 per cent stake in India Cements for ₹3,945 crore from the company’s promoters and its associates.
The country’s largest cement company will make an open offer to India Cements shareholders at ₹390 a share after obtaining all regulatory approvals, said the company in a statement on Sunday.
The company will soon sign a Share Purchase Agreement with N Srinivasan-led India Cements promoters and their associates before seeking regulatory approvals.
The Board of Directors of UltraTech, at its meeting held on Sunday, approved the purchase of a 32.72 per cent equity stake of India Cements promoters and their associates.
In June, UltraTech made a financial investment in India Cements to acquire 22.77 per cent equity at a price of ₹268 per share.
“Post this financial investment, the promoter group approached us as they wanted to sell their holding in the company, and we found it appropriate to acquire their stake in the company,” said UltraTech Cement.
India Cements has a capacity of 14.45 mtpa of grey cement. Of this, 12.95 mtpa is in the South (particularly Tamil Nadu) and 1.5 mtpa is in Rajasthan. The transaction is subject to regulatory approvals.
Kumar Mangalam Birla, Chairman, Aditya Birla Group said UltraTech Cement’s investments over the years, both organic and inorganic, have been designed to propel India to become a building solutions champion globally.
“Every investment in a core sector like cement accelerates economic activity and drives progress,” he said.
The India Cements opportunity is an exciting one as it enables UltraTech to serve the Southern markets more effectively and also accelerates the company’s path to over 200 MTPA capacity, he said.
UltraTech is the third largest cement producer in the world, outside China, with a total Grey Cement capacity of 154.86 MTPA.
India Cements registered a net loss of ₹61 crore in the March quarter against a loss of ₹244 crore logged in the same period last year.
Its income was down at ₹1,287 crore (₹1,494 crore).
In April, Ultratech Cement acquired a grinding unit of India Cements in Maharashtra for ₹315 crore. The grinding unit, located in Parli has a capacity of 1.1 MTPA and includes a captive railway siding.
The Birla flaship recently commissioned two new greenfield capacities of 5.4 MTPA in Chhattisgarh and Tamil Nadu, bringing its total capacity to 151.6 MTPA.
Last November, UltraTech acquired the 10.75 MTPA cement business of Kesoram Industries in a share-swap deal. UltraTech will issue one share for every 52 shares of Kesoram, implying an offer price of ₹173.15 per share, a 34 per cent premium to Kesoram’s last close.
The deal is estimated to be valued at ₹7,600 crore, including the debt of Kesoram.
UltraTech and second placed Adani Group companies Ambuja Cement and ACC are in a pitched battle to prove their supremacy.
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