UltraTech To Buy 32.72% Stake in India Cements

India’s largest cement maker UltraTech Cement said on Sunday that it will acquire a 32.72 per cent stake in India Cements from its promoters and their associates. The acquisition, valued at Rs 3,954 crore, will trigger an open offer which, if fully subscribed, will raise the total cost for UltraTech to Rs 7,100 crore.

The Aditya Birla Group-owned cement entity said after signing the share purchase agreements and obtaining regulatory approvals, UltraTech will pay Rs 3,954 crore at Rs 390 per share for buying a 32.72 per cent stake in India Cements. It added that the share purchase will trigger a mandatory open offer at the same price of Rs 390 per share.

The open offer will be done subsequently after obtaining all regulatory approvals,” UltraTech said in its statement. Last month, UltraTech made a financial investment of Rs 1,889 crore for a 22.77 per cent equity stake at Rs 268 per share. The company had picked this stake from the open market from billionaire investor Radhakishan Damani and his associated entities.

“Post-this (June) financial investment, the promoter group approached us as they wanted to sell their holding in the company, and we found it appropriate to acquire their stake in the company,” UltraTech said.India Cements has a total capacity of 14.45 million tonnes per annum (MTPA) of grey cement. Of this, 12.95 MTPA is in the South (particularly Tamil Nadu) and 1.5 MTPA in Rajasthan. The transaction is subject to regulatory approvals and is expected to be completed in six months.

The company’s latest acquisition will put another 14.5 MTPA capacity between UltraTech and its closest rival Adani Cement. As of June, UltraTech had an operational capacity of 149.5 MTPA in India and 154.9 MTPA overall (including overseas).  Ambuja Cements-ACC (Adani-promoted entities) operated 77 MTPA as of March, excluding underway acquisitions.

All top four cement makers in India are in a rush to add fresh capacities to capture India’s infrastructure-fuelled demand. UltraTech plans to operate 200 MTPA by 2028, while Adani aims for 140 MTPA in the same period.

Adani-promoted Ambuja Cements has been on an acquisition spree, particularly expanding capacity in South India. Industry analysts see UltraTech’s latest move also as an attempt to keep Adani out of acquiring India Cements