AV Birla group’s UltraTech Cement has scooped up a 23 per cent stake in Chennai-based India Cements for ₹1,889 crore — which follows a rash of acquisitions by the Adani group as the consolidation in the industry gathers pace.
Describing the deal as a “financial investment”, UltraTech said it will acquire up to 7.06 crores of equity shares of India Cements.
According to the block deal data on the BSE, the shares were purchased in the price range of ₹265.05-283.3.
The sellers are Gopikishan Shivkishan Damani, Kiran Devi Damani, Radhakishan Shivkishan Damani and Shrikanta Devi Damani, as per the data. R.K. Damani’s Derive Investments and Derive Trading and Resorts Pvt Ltd also offloaded the shares of India Cements. Damani is the founder of India’s top retail chain DMart.
UltraTech will become the second largest shareholder in ICL, which has a manufacturing capacity of 16 million tonnes (mt).
The deal comes within two weeks after Adani Group, the second largest cement maker in the country, announced the acquisition of Hyderabad-based Penna Cement at an enterprise value of ₹10,422 crore this month, which will add 14mt, taking its capacity to 93mt. UltraTech has a consolidated capacity of 152.7mt.
Since UltraTech has acquired 23 per cent in India Cements, it will not have to make an open offer for the shareholders of India Cements.
Sebi rules mandate an open offer of 26 per cent if a company acquires more than 25 per cent of a listed firm.
Though the Birlas consider the acquisition as “financial”, speculations are swirling over a possible hostile takeover at a later stage.
The promoters of India Cements, led by N. Srinivasan, holds only 28.42 per cent — the difference is only 5 per cent which can also be acquired from the open market.
With both Birla and Adani expanding their capacities, market circles said other small- and medium-sized cement firms could be potential targets.
UltraTech’s move would thwart any attempt by Adani to get a stake in India Cements, they said. The possibility of the India Cements promoters beefing up their stake in the near future is also not ruled out.
The stock markets gave a thumbs-up to the deal with shares of both India Cements and UltraTech Cement ending on a higher territory.
While the UltraTech share settled at ₹11,714.80, a gain of 5.07 per cent over the last close, India Cements shot up nearly 11.50 per cent to finish at ₹293.15 on the BSE.
“It is becoming clearer that larger incumbents are vying for a slice of the pie in South India,” said Choice Broking’s Ashutosh Murarka, according to Reuters.
