UltraTech Cement shares gain after its board approves additional 32.72% acquisition of India Cements

Meanwhile, the share price of Chennai-based cement manufacturer India Cements also rallied nearly 3 percent on BSE in early trade on Monday, as per reports.

According to reports, at 9:25 am today (July 29), UltraTech Cement shares were trading 1.21 percent higher at Rs 11,820.65, while India Cements shares were trading 0.56 percent higher at Rs 376.70 apiece on the BSE.

The Aditya Birla Group-owned UltraTech Cement said on Sunday (July 28) that its board of directors had approved the acquisition of a 32.72 percent equity stake of the promoters and their associates in India Cements for Rs 3,954 crore at Rs 390 per share.

The price is 4.1 percent higher than India Cements share’s closing price of Rs 374.60 apiece last Friday (July 26), according to reports.

UltraTech Cement, earlier in June 2024, had made a financial investment in N. Srinivasan-headed India Cements to acquire 22.77 percent equity at a price of Rs 268 per share.

With the latest announcement of 32.72 percent acquisition, UltraTech Cement will become the majority shareholder in India Cements with a holding of 55.49 percent stake, reports Mint.

UltraTech Cement said in a stock exchange filing that the stake sale will also trigger a mandatory open offer, and both the stake sale and open offer will be subject to regulatory approvals.

The acquisition of India Cements, which has a total capacity of 14.45 million tonnes per annum (mtpa) of grey cement, including 12.95 mtpa in Tamil Nadu and 1.5 mtpa in Rajasthan, will add 9 percent to UltraTech Cement’s current capacity and augments its capacity share by 2 percent on a pan-India basis, reports Mint.

After the acquisition, UltraTech Cement’s cement capacity would increase to 214 MT, including Kesoram, by FY27E from the current 156 MT ex-Kesoram, as reported by Mint.

According to industry experts, the increased consolidation in the cement industry is expected to benefit the top two groups in terms of market share.

UltraTech paid a 'very, very high price' for India Cements stake: Shree Digvijay Cement's Anil Singhvi

Moneycontrol reported, quoting industry veteran and Shree Digvijay Cement's executive chairman Anil Singhvi, that the price paid by Ultratech Cement for India Cements stake is very attractive for N. Srinivasan.

Singhvi added that the Aditya Birla Group-owned cement company's move to acquire the grinding unit some months ago was a step in the right direction.

"This is a huge advantage for N. Srinivasan," Anil Singhvi said in conversation with CNBC-TV18.

"I would trace back to when UltraTech acquired their grinding unit in Nashik about 6-12 months ago. I think there were indications of moving in the right direction," Singhvi told CNBC-TV18.

"Of course, RK Damani's holding was a clear path that they would not stop at 23 percent, that it was not an investment on the balance sheet but they would acquire the complete asset as well," he added.

Since UltraTech picked up stake in India Cement for the first time last month, the shares of India Cement are higher by over 42 percent.

India Cements sale to not affect N. Srinivasan-owned Chennai Super Kings

UltraTech Cement's proposed acquisition of India Cements has stirred interest beyond the business domain, but it has become clear that the deal will not affect cricket, and Chennai Super Kings (CSK), on of the most successful IPL teams, will continue to be owned by N. Srinivasan and his family, according to reports.

CSK is now an independent entity, separate from India Cements, owned by approximately 1,00,000 shareholders of the Chennai-based firm, reports Firstpost, adding that CSK separated from India Cements around 2015, with shares of the IPL franchise distributed among the shareholders of India Cements at the time, while the majority and controlling stake remained with the N. Srinivasan family.