Minority shareholders of Ambuja Cements seem to have got a raw deal in the entire consolidation process initiated on Wednesday by the Switzerland-based Holcim Group. Reflecting popular sentiment, shares of ACC and Ambuja Cements tanked three per cent and 11 per cent to Rs 1,194 and Rs 171 respectively, on Wednesday.
Shriram Subramanian, Managing Director, InGovern, an investor advisory body, said Ambuja Cements should have distributed the Rs 3,500 crore as dividend to shareholders rather than buying the 24 per cent stake of Holderind Investments in ACC.
“It is going to be a real test for the minority investor. According to SEBI norms, deals of this nature require approval of two-third minority shareholders. The norms came into effect from February. Hope the minority shareholders emphasise their rights and halt this deal,” he said.
If Holcim did want to consolidate its holding, it could have straight away merged both the companies rather than indulge in such a complex deal, Subramanian added.
On the synergy part, he said, both the companies would continue to have different board of directors, chief executive officers and top officials.
The amalgamation process may witness Ambuja Cements eroding a major portion of its Rs 7,000-crore reserves, said analysts.
‘Negative for minority’
Terming the deal negative for Ambuja Cements’ minority shareholders, Ajit Motwani, Research Analyst, Emkay Stock Global Financial Services, said the huge cash balance would be ceded with no earning per share accretion. Moreover, he added, visibility on benefits put forth by the management remains hazy, as ACC and Ambuja would continue to operate as separate entities.
On the positive side, Holcim has committed to invest Rs 3,000 crore over the next two years to acquire up to 10 per cent in ACC, without triggering a mandatory open offer. This could possibly lend support to the ACC stock price over the long term, he added.
The deal implies that the Holcim stake in ACC would drop to 31 per cent from the current 50.3 per cent after the deal. Hence, Holcim intends to increase its stake in ACC via Ambuja Cements.