Aditya Birla Group's flagship company, UltraTech Cement, has announced plans to acquire a 32.72% stake in India Cements (ICL) from its promoters and their associates for Rs 3,954 crore. This strategic move aims to expand UltraTech's footprint in the highly competitive and fast-growing Southern cement market, particularly in Tamil Nadu. Additionally, UltraTech has announced an open offer worth Rs 3,142.35 crore to acquire another 26% stake in ICL from its shareholders.
The announcement follows closely on the heels of Adani Group's acquisition of Hyderabad-based Penna Cement for Rs 10,422 crore, which will add 14 million tonnes per annum (MTPA) to Adani's capacity, bringing it to 93 MTPA. UltraTech, with an installed capacity of 154.86 MTPA of grey cement, leads the Indian cement industry and has ambitions to become one of the largest cement companies globally, setting a target of 200 MTPA.
The board of UltraTech approved the acquisition of a 32.72% stake from ICL's promoters at Rs 390 per share. The agreement includes a 28.42% stake from promoters Srinivasan N, Chitra Srinivasan, Rupa Gurunath, and S.K. Asokh Baalaje, and a 4.30% share from Sri Saradha Logistics. Post-acquisition, UltraTech's stake in ICL will exceed 55%, necessitating an open offer as per SEBI regulations.
The open offer will encompass up to 8.05 crore equity shares, representing 26% of ICL's equity share capital, at Rs 390 per share. If fully subscribed, this open offer will cost UltraTech Rs 3,142.35 crore. The price offered by UltraTech is 4.1% higher than ICL's closing share price of Rs 374.60 last Friday.
"Post signing of SPA and obtaining regulatory approvals, UltraTech will pay Rs 3,954 crore at Rs 390 per share for buying 32.72% stake in India Cements from the promoters & their associates. This will trigger a mandatory open offer at Rs 390 per share. The open offer will be done subsequently after obtaining all regulatory approvals", UltraTech stated.
Upon completion of the acquisition and Competition Commission of India (CCI) approval, UltraTech will have sole control over ICL and become its promoter. However, ICL, led by former BCCI president N. Srinivasan, noted that there will not be any change in management until the acquisition is finalized.
In June, UltraTech acquired a 23% stake in ICL by purchasing Damani group's shares through two block deals estimated at around Rs 1,900 crore. This latest transaction is a strategic move to strengthen UltraTech's presence in the Southern market, where it currently has a limited presence. UltraTech's sole integrated unit in Tamil Nadu, Reddipalayam Cement Works, has a capacity of 1.4 MTPA.
Aditya Birla Group Chairman Kumar Mangalam Birla stated that the acquisition of India Cements is an exciting opportunity for UltraTech to serve the Southern markets more effectively and accelerate its path to over 200 MTPA capacity. UltraTech's investments in both organic and inorganic growth have been designed to position India as a global leader in building solutions, driving economic activity and infrastructure development nationwide.
India Cements has a total group capacity of 14.45 MTPA of grey cement, with 12.95 MTPA in the South and 1.5 MTPA in Rajasthan. UltraTech, a USD 8.4 billion flagship company of the Aditya Birla Group, boasts a consolidated capacity of 152.7 MTPA of grey cement, 24 integrated manufacturing units, 33 grinding units, one clinkerisation unit, and eight bulk packaging terminals