Ultratech in talks with rivals, PES on divestiture plans

India’s largest cement major, Ultratech, has initiated discussions with several rival companies and private equities (PES) to sell a few plants in western and central India to win the Competition Commission of India’s approval. This could help it acquire Swiss cement major Holcim's 63 per cent stake in Ambuja Cements.

While making an “aggressive” non-binding bid, a banker said, Ultratech has also sought additional time from Holcim to close the deal as any combination between Ultratech and Ambuja Cements-acc will trigger the CCI’S objections and will lead to divestments of assets from Ultratech, Ambuja, and ACC.

Ultratech, the source said, will talk to all the rival players who are interested in acquiring the plants within a deadline.

Spokespersons for Holcim and Ultratech declined to comment.

“The offer by Ultratech is very aggressive though the other two bidders — Adani Group and JSW — have the options to better it once Holcim selects any of them for exclusive talks,” said a source close to the development. The PES are also approached, in case they want to make an investment in the Indian cement industry.

Ultratech has 120 million tonnes per annum of capacity while India's number two cement firm, Ambuja, and its subsidiary, ACC, have a capacity of 64 mtpa. Most of the divestment of assets will be in Gujarat and Central India where the acquisition will cross the CCI threshold.

Ultratech has already submitted the divestiture plan to Holcim and has details on plants that the company and Ambuja/acc need to sell to get the CCI’S approval.

When compared to other two bidders, Ultratech will also take an additional six to eight months to complete the deal.

Ambuja Cements shares closed at 4 per cent up on Thursday at ~373 a share, giving it a total valuation ~74,000 crore even as BSE Sensex was down 2.1 per cent.

“While Holcim is seeking an early exit, Ultratech’s higher offer will cause the Swiss firm to delay the sale. Other two bidders will have to re-think their bidding strategy,” the banker said. “The ball is in Holcim’s court.”