UltraTech Cement Acquires 32.72% Stake in India Cements, Aiming for 200+ MTPA Capacity
News Mania Desk/Agnibeena Ghosh/28th July 2024
The Board of Directors of UltraTech Cement has greenlit the acquisition of a 32.72% equity stake in India Cements Limited from its promoters and their associates. This decision follows UltraTech’s earlier strategic investment in June 2024, where the company secured a 22.77% equity stake in India Cements at a rate of Rs 268 per share.
Subsequently, the promoters of India Cements approached UltraTech to sell their holding. UltraTech saw this as an advantageous move and decided to acquire the additional stake. India Cements has a total grey cement production capacity of 14.45 million tonnes per annum (mtpa), with 12.95 mtpa located in the South, predominantly in Tamil Nadu, and 1.5 mtpa in Rajasthan.
The transaction, valued at Rs 3,954 crore, involves UltraTech purchasing the 32.72% stake at Rs 390 per share. This deal is contingent upon obtaining the necessary regulatory approvals. Once the Share Purchase Agreement (SPA) is signed and the approvals are secured, UltraTech will proceed with the payment and acquisition process.
This acquisition will trigger a mandatory open offer at Rs 390 per share, which will be executed after receiving all required regulatory consents. The open offer provides an opportunity for other shareholders to sell their shares at the same price.
Commenting on the development, Mr. Kumar Mangalam Birla, Chairman of the Aditya Birla Group, stated, “UltraTech Cement’s investments over the years, both organic and inorganic, have been designed to propel India to become a building solutions champion globally. Every investment in a core sector like cement accelerates economic activity and drives progress. These investments have also facilitated India’s nationwide infrastructure upgrade, powering our country’s growing need for housing, roads, and other vital infrastructure. This, in turn, has had a tremendous impact on the lives and aspirations of people.”
He added, “The India Cements opportunity is an exciting one as it enables UltraTech to serve the Southern markets more effectively and also accelerates our path to 200+ MTPA capacity.”
On Friday, UltraTech Cement shares closed at Rs 11,664.05, marking a 1.95% increase from the previous trading session. The 52-week high and low of the share are Rs 12,078 and Rs 7,987.65, respectively.
This strategic acquisition by UltraTech is expected to enhance its market presence and production capacity, aligning with its goal of reaching over 200 mtpa. The expansion into the Southern markets, facilitated by this acquisition, will enable UltraTech to meet the increasing demand for cement in this region, supporting infrastructure development and economic growth.
UltraTech’s consistent focus on strategic investments, both organic and inorganic, has positioned it as a leading player in the cement industry. The acquisition of a significant stake in India Cements is a testament to UltraTech’s commitment to strengthening its market position and capacity.
The mandatory open offer following the acquisition will allow other shareholders to benefit from the same price per share, ensuring a fair opportunity for all stakeholders. As UltraTech continues to expand and invest in core sectors, its role in driving economic activity and infrastructure development in India remains pivotal.
With the acquisition of India Cements, UltraTech is set to further consolidate its position in the cement industry, aiming to meet the growing demands of a rapidly developing nation. The company’s strategic investments and acquisitions underscore its commitment to growth and innovation in the building solutions sector.
