Summary
UltraTech Cement is set to acquire a 32.72% stake in India Cements for ₹3,954 crore, triggering an open offer that could bring the total cost to ₹7,100 crore. This follows a recent investment of ₹1,889 crore for a 22.77% stake. India Cements has a capacity of 14.45 MTPA, mainly in Tamil Nadu and Rajasthan. The acquisition will enhance UltraTech’s presence in Southern markets and aligns with its goal of reaching 200+ MTPA capacity by 2028. The deal, pending regulatory approvals, will significantly boost UltraTech’s capacity and is seen as a strategic move against Adani Cement.
Key Points
- UltraTech Cement will acquire a 32.72% stake in India Cements, valued at ₹3,954 crore.
- This acquisition will trigger an open offer, potentially raising the total cost to ₹7,100 crore.
- UltraTech will pay ₹390 per share for this stake, and the open offer will be at the same price.
- Last month, UltraTech invested ₹1,889 crore for a 22.77% stake in India Cements at ₹268 per share, purchased from billionaire investor Radhakishan Damani and his associates.
- India Cements has a total capacity of 14.45 million tonnes per annum (MTPA) of grey cement.
- 12.95 MTPA is in South India (mainly Tamil Nadu).
- 1.5 MTPA is in Rajasthan.
- The acquisition strengthens UltraTech’s presence in Southern markets and supports its goal to achieve a 200+ MTPA capacity.
- The transaction requires regulatory approvals and is expected to be completed in six months.
- The deal offers UltraTech the chance to optimize or defer its existing capacity expansion plans in the South.
- Adds 14.5 MTPA capacity, enhancing UltraTech’s competitive edge against Adani Cement.
- Major cement makers in India are expanding capacities to meet growing infrastructure demand.
- UltraTech aims for a 200 MTPA capacity by 2028.
- Adani targets 140 MTPA.
- Some analysts believe the deal may not be beneficial for UltraTech in a capacity-rich market but see it as a strategy to prevent Adani from acquiring India Cements.
- Post-acquisition, UltraTech’s operational capacity in India will significantly increase from its June capacity of 149.5 MTPA in India and 154.9 MTPA globally.
