Mumbai, Aug. 23: Holcim, the world’s second largest cement maker, is consolidating its position in Ambuja Cements Ltd.
Holcim today announced that it had acquired another 3.94 per cent in Ambuja Cements from its founder promoters at a price of Rs 154 per share. This will be followed by an open offer to mop up another 20 per cent stake, giving the Swiss company a majority stake in Ambuja Cements.
Holcim holds around 32.35 per cent in Ambuja Cements through Holderind Investments and Ambuja Cements India Pvt Ltd.
Holcim will have to shell out $1.34 billion for the total stake buy. Analysts said the deal valued Ambuja Cements at over $5.5 billion. On a per tonne basis, the valuation stands at over $300.
According to the agreement signed on Wednesday, Holcim Mauritius will acquire 6 crore shares of Ambuja Cements from Radha Madhav Investments and RKBK Fiscal Services.
Radha Madhav Investments and RKBK Fiscal Services are entities controlled by Ambuja Cements (erstwhile Gujarat Ambuja Cements) and they held around 4.74 per cent of the company’s equity as on June 30.
Holcim has been gradually raising its stake in Ambuja Cements over the past one year.
In April, it acquired 2.79 crore shares of the company in a block deal worth Rs 321.55 crore. In November 2006, it acquired 5 crore shares or 3.7 per cent from Radha Madhav Investments and RKBK Fiscal Services.
With the acquisition of the 3.94 stake in Ambuja Cements, Holcim will exceed the acquisition limit of 5 per cent in a fiscal set by Sebi’s takeover norms and will thus be required to make an open offer.
The 3.94 per cent stake sale is valued at $220 million. The open offer, if fully subscribed, will involve a payout of up to $1.2 billion.
Holcim said it expected the open offer to be concluded by the end of November. The offer price represents a premium of around 20 per cent over the average price of the scrip on the National Stock Exchange in the last two weeks.
If the offer is accepted in full, Holcim’s stake in Ambuja Cements will rise to more than 56 per cent. The total investment of $1.34 billion will be financed through internal resources and credit facilities.
Analysts added that the Holcim open offer showed that the Swiss firm was confident about the future prospects of the cement industry in India.
Shares of Ambuja Cements opened higher at Rs 140 on the BSE today. It ended at Rs 132.75, a gain of 1.72 per cent over its previous close.
Ambuja Cements plans to increase its annual cement capacity to 21 million tonnes from 18 million tonnes by the end of the year. Another 5 million tonnes will be added once the company’s facilities at Bhatapara (Chhattisgarh) and Rauri (Himachal Pradesh) go on stream in 2009.