Century’s cement unit to merge with UltraTech Cement

MUMBAI: UltraTech Cement Ltd, part of the Aditya Birla group, will acquire the cement business of BK Birla group’s Century Textiles and Industries Ltd in an allstock transaction.

Shareholders of Century Textiles will receive one share of UltraTech for every eight shares held, according to the plan. The enterprise value of Century’s cement business is pegged at ₹8,561 crore and UltraTech will absorb debt of ₹3,000 crore, managing director K K Maheshwari said over the phone.

Sunday’s announcement is the culmination of a plan that was eight years in the making and involved consolidating the cement businesses of the two groups into one firm and the BK Birla group exiting non-core businesses to focus on real estate.

Century Textiles’ cement assets comprise three integrated units in Madhya Pradesh, Chhattisgarh and Maharashtra with a total capacity of 11.4 million tonnes per annum (mtpa) and a 2 mtpa grinding unit in West Bengal. “The transaction provides UltraTech the opportunity for further strengthening its presence in the highly fragmented, competitive and fastgrowing east and central markets and extending its footprint in the western and southern markets in the country,” the company said in a statement.

On completion of the transaction, UltraTech’s capacity will rise to 109.9 mtpa, including its overseas operations. This will make UltraTech the world’s third-largest cement maker outside China.

The transaction is part of the Birla family’s plan to consolidate its cement businesses within one company, said UltraTech’s Maheshwari. “Some of these (acquired) plants are old and they would need significant capital expenditure to modernize them,” Maheshwari said.

The transaction is subject to the regulatory approvals and is expected to be completed within six to nine months, UltraTech said in a press statement on Sunday. Walker Chandiok & Co. and Bansi S Mehta & Co. were the independent joint valuers. Axis Capital provided the fairness opinion and Khaitan & Co. and Trilegal were the legal advisers.