UltraTech to acquire India Cement; buy 32.72 pc promoters' stake for Rs 3,954 cr

New Delhi: UltraTech Cement, a key company of the Aditya Birla Group, is set to purchase a 32.72 percent share in India Cements for Rs 3,954 crore from promoters and their associates. This move will allow UltraTech Cement to increase its presence in the fiercely competitive and rapidly growing cement market in the southern region, specifically in Tamil Nadu.

Furthermore, Ultratech has also disclosed a open offer of Rs 3,142.35 crore to purchase an additional 26 percent stake in India Cements Ltd (ICL) from its shareholders. This announcement follows a month after Adani Group, the second biggest cement manufacturer, declared the purchase of Penna Cement, based in Hyderabad, for Rs 10,422 crore. This will increase its capacity to 93 MTPA with an additional 14 MTPA.

UltraTech Cement is at the forefront of the Indian cement industry with a capacity of 154.86 million tonnes per annum of grey cement. It aims to be among the biggest cement firms globally and has set a goal for 200 MTPA. Nevertheless, Adani Group, which ventured into the cement industry in September 2022 by purchasing Ambuja Cement from Swiss company Holcim for a cash sum of USD 6.4 billion (approximately Rs 51,000 crore), is also accelerating its progress.

Adani Group aims to reach a 140 MTPA capacity by FY28 and is actively growing through both increasing capacity at current units and pursuing acquisitions. Ambuja also holds ownership of ACC Ltd and bought MyHome Industries and Sanghi Industries in 2023.According to a filing with regulators on Sunday, the Aditya Birla company's board has given the green light for the purchase of a 32.72 percent stake from promoters and their associates at Rs 390 per share.

The company has signed share purchase agreements to acquire a 28.42 pc stake from promoters Srinivasan N, Chitra Srinivasan, Rupa Gurunath, and S K Asokh Baalaje, as well as a 4.30 pc share from Sri Saradha Logistics. Following the Rs 3,954 crore agreement, UltraTech will have a stake of more than 55 percent in India Cements Ltd (ICL), requiring it to proceed with the open offer in accordance with Sebi rules.

The board of UltraTech has also given the green light to an "open offer" for up to 8.05 crore equity shares, which is equivalent to 26 pc  of the equity share capital of the Target, at Rs 390 per equity share from the public shareholders of Target, as stated in the filing. The price proposed by UltraTech is 4.1 percent above the ICL share's closing price of Rs 374.60 from last Friday. If all the slots are filled, UltraTech will have to pay Rs 3,142.35 crore for the open offer.

After the SPA is signed and regulatory approvals are secured, UltraTech will purchase a 32.72 pc stake in India Cements from the promoters and their associates for Rs 3,954 crore at a rate of Rs 390 per share. This will result in an obligatory open offer at Rs 390 per share. The company stated that the open offer will be carried out once all necessary regulatory approvals have been obtained. It was stated that following the purchase of the promoter's shares and approval from CCI, "the company will gain exclusive control of ICL and be considered a promoter of ICL".