New Delhi: Aditya Birla’s top cement maker UltraTech Cement Ltd has acquired the cement business of Kesoram Industries in a share swap, according to a filing with the exchanges on Thursday.
UltraTech will issue one share for every 52 shares of Kesoram and the agreement implies an offering price of ₹173.15 rupees per share, a 34% premium to Kesoram’s last closing price. The deal is estimated to be valued at ₹5,379 crores.
“For this transaction, 59,74,301 new equity shares of the company will be issued to the shareholders of Kesoram as on the record date as defined in the Scheme. This will increase the share capital of UltraTech to ₹294.66 crore consisting of 29.47 crore equity shares of Rs. 10 each,” UltraTech said in the filing.
After the acquisition, UltraTech’s cement capacity will reach 149.14 million tonnes per annum (mtpa), including its overseas operations. “The proposed transaction will accelerate the Company’s path towards achieving its stated target of 200 MTPA cement capacity in India,” it noted.
The company hopes to expand its footprint in the highly fragmented, competitive and fast-growing western and southern markets in the country following the deal. It will help improve the company’s reach in southern markets such as Telangana where the company currently does not have any cement plant. The operations will be enhanced by economies of scale resulting from synergies in procurement, logistics and fixed costs, the company added.
The cement business of the BK Birla Group company, Kesoram, consists of two integrated cement units at Sedam, Karnataka, and Basantnagar, Telangana with a total capacity of 10.75 million tonnes per annum (mtpa). Of this total capacity, 8.50 MTPA is clinker-backed and 2.25 mtpa is excess grinding capacity. The cement business also has a 0.66 mtpa packing plant in Solapur, Maharashtra.
The arrangement for the separation of Kesoram from its cement business into UltraTech is expected to be completed within 9-12 months and subject to the approval of shareholders and creditors, stock exchanges, and regulatory authorities.
Bansi S. Mehta Valuers LLP and PwC Business Consulting Services LLP were the registered valuers acting as independent joint valuers with ICICI Securities Limited providing an opinion on the fairness of the valuation. Khaitan & Co., Mumbai acted as the legal advisors, while Trilegal will advise on Competition Law matters, the company said.
Before the latest announcement, shares of Ultratech today ended at ₹9,004 in the National Stock Exchange, more than 3% from the previous close. Kesoram’s shares closed at ₹139.45, up 5%.
Milestone Warning!Livemint tops charts as the fastest growing news site in the world 🌏 Click here to know more
Catch all Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates and Live Business News.
More or less
Updated: 30 Nov 2023, 18:58 IST