Mumbai, Jan. 30: Holcim, the Swiss cement giant, has acquired a 14.8 per cent stake in Gujarat Ambuja Cements Ltd (GACL) in a Rs 2,100-crore ($ 477 million) deal with the Sekhsaria and Neotia founder families.
Holcim, which already runs ACC, will now gain management control of Gujarat Ambuja Cements as well. This will make Holcim a formidable player ' with a combined capacity of over 31 million tonnes ' that can now vie with Kumar Mangalam Birla for top honours in the country’s cement industry.
The Sekhsarias and Neotias concluded the deal with Holcim last Saturday under which they sold 20 crore equity shares. Sekhsaria and his associates will hold 8.8 per cent in GACL. Holcim paid Gujarat Ambuja’s promoters a price of Rs 105 per share that included a non-compete fee of Rs 15 per share.
The Swiss cement giant’s holding in Gujarat Ambuja could rise if shareholders bite its Rs 90 per share open offer for another 20 per cent stake. It has earmarked a sum of $560 million for the open offer. If it is successful, Holcim will have to shell out over $1 billion to obtain over 34 per cent in Gujarat Ambuja Cements, which is one of the most cost-efficient cement producers in the country.
On Monday, the Gujarat Ambuja stock closed off its highs at Rs 90.45 after opening at Rs 97 and rising to an intra-day high of Rs 97.95. If the stock stays poised above Rs 90, Holcim’s open offer will hold only academic interest.
Analysts feel Holcim has paid a “substantial premium” to obtain the stake in GACL. On an enterprise value basis, they peg the deal at a price of around $220 per tonne, which is twice the amount it paid last year when it picked up a stake in ACC.
At present, GACL is the country's third largest cement producer. ACC occupies the second slot behind UltraTech Cement, which belongs to the AV Birla group. Together with Grasim Industries, the group controls over 31 million tonnes of cement capacity in the country.
Holcim will nominate three directors on the board of GACL after the closure of the open offer. GACL today announced that Narottam S. Sekhsaria, founder promoter and managing director, has now been appointed as non-executive vice-chairman of the company after he stepped down as managing director for personal reasons. Anil Singhvi, a whole-time director of the company, was appointed as the managing director.
Last year, Holcim entered into a strategic pact with GACL and took over the majority in Ambuja Cement India Ltd (ACIL). Through this local holding company, Holcim acquired a majority in Ambuja Cement Eastern Ltd and a substantial stake in ACC. While Holcim has held a majority of the seats on ACC’s board through ACIL since January 24 last year, Holcim’s stake in ACIL will effectively go up to 72 per cent from 67 per cent at present.