UltraTech Cement acquires 23 per cent stake in India Cements

Following this announcement, billionaire investor Radhakishan Damani and his associates sold 23% equity in ICL to UltraTech for Rs 1,889 crore.
UltraTech said it is a non-controlling financial investment and the indicative time period for the completion of the deal is one month.
UltraTech said it is a non-controlling financial investment and the indicative time period for the completion of the deal is one month.File photo

NEW DELHI: In a bid to remain ahead of the growing competition, Aditya Birla Group-led UltraTech Cement has acquired a 23% stake in Chennai-based India Cements Ltd (ICL).

The country’s top cement manufacturer on Thursday announced purchasing 70.6 million shares of India Cements at a price of up to Rs 267 per share, with a total deal value of Rs 1,885 crore. UltraTech said it is a non-controlling financial investment and the indicative time period for the completion of the deal is one month.

Following this announcement, billionaire investor Radhakishan Damani and his associates sold 23% equity in ICL to UltraTech for Rs 1,889 crore. The deal took place at an average price of Rs 267.74 per share, showed the BSE data. With this, UltraTech has become the second-largest investor in ICL. Promoters led by N. Srinivasan currently own 28.42% of India Cements.

The deal between UltraTech and ICL comes two weeks after Adani Group’s Ambuja Cement announced the acquisition of Hyderabad-based Penna Cement at an enterprise value of Rs 10,422 crore. Consolidation in the cement sector has escalated ever since the Adanis entered this sector by acquiring Ambuja Cements and ACC in 2022.

UltraTech has a 150.3 million tonnes (MT) capacity and aims to expand the same to 200 MT by FY27, excluding any future acquisitions. If UltraTech decides to become the majority stakeholder in India Cement, it has to add 15.5 MT to its capacity. It would increase its presence in Southern India, where it has a smaller market share.

An industry analyst said there is a high possibility that Birlas may launch an open offer for ICL soon given it needs only 2% more shares to do so. “It would be positive for the shareholders of ICL as the company has high operating costs and struggling to compete with the big names,” the analyst said requesting anonymity. India Cements shares rose 11.5%. For the fiscal ended March 31, 2024, ICL’s consolidated net loss was at Rs 215.76 crore and revenue came at Rs 5,112 crore.

UltraTech had earlier acquired about 1 MT of capacity from ICL in Maharashtra besides buying large cement companies such as Jaypee Cement, Binani Cement and Kesoram.

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