Mumbai: Ambuja Cement and ACC Ltd - the two LafargeHolcim units - have decided to shelve their much awaited merger for now.

In an announcement after the market hours, both the companies said they were not going ahead with the merger at this point of time because of some difficulties.

"On the basis of a comprehensive evaluation carried out by both the special committee and the board of directors of the company, the board is of the opinion that there are at present certain constraints in implementing a merger. Consequently, the company is not pursuing a merger at this point of time, though it remains the ultimate goal," both the companies said in a similar announcement on Monday.

While they did not comment on what the constraints were, market circles said one of the reasons could have been higher regulatory costs such as stamp duties.

In May last year, the companies had announced they were considering a merger. The move was seen as an attempt by LafargeHolcim to consolidate its Indian business and take on UltraTech Cement - the AV Birla group firm.

For the quarter ended December 31, 2017, Ambuja Cements held a little over 50 per cent in ACC, while an arm of Holcim-Holderind Investments had a stake of 4.48 per cent. On the other hand, Holderind Investments holds 63.56 per cent in Ambuja Cements.

While Ambuja Cements has a capacity of around 29.65 million tonnes, the combined capacity of the two is over 63 million tonnes.

UltraTech Cement has a grey cement capacity of 93 million tonnes. Late last year, the company had announced the setting up of a 3.5-million-tonne plant at Pali in Rajasthan for Rs 1850 crore.

Both ACC and Ambuja Cements said in the statement that with a view to maximising synergies and unlock additional value for their shareholders, their boards have approved an arrangement for mutual purchase and sale of materials and services. They will take shareholders' nod for the proposed arrangement.

Ahead of the announcement, shares of both the companies had ended with gains of one per cent.

During the quarter ended December 31, 2017, ACC posted a consolidated net profit of Rs 206 crore compared with Rs 91 crore in the year-ago period. This came on the back of higher sales at Rs 3,417 crore against Rs 2,625 crore in the year-ago period. The quarter was marked by a rise in the prices of imported coal and petcoke and limited availability of linkage with domestic coal which saw the company opting for costlier fuel.

For Ambuja Cements, the net profit for the quarter came in at Rs 338 crore against Rs 179 crore a year ago.