The Hindu : Business : Ambuja Cements strikes major deal with Holcim

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Friday, Jan 21, 2005

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Business

Ambuja Cements strikes major deal with Holcim

By Our Staff Correspondent

MUMBAI, JAN. 20. In a move that signals a significant consolidation in the Indian cement industry, Holcim, the world's second largest cement maker, has entered into an agreement with private equity investors (AIG and GIC) of Ambuja Cement India Ltd. (ACIL) to acquire their entire 40 per cent shareholding in ACIL. Simultaneously, Holcim has also entered into a share subscription agreement with ACIL for its proposed subscription of about $600 million towards capital. After the necessary regulatory approvals, Holcim will have a 67 per cent stake in ACIL and Ambuja Cements the balance.

Gujarat Ambuja Cements Ltd. (GACL) and Holcim Ltd., Zurich, have entered into a strategic partnership to realise value-creating projects in India and to participate in the Indian cement industry's growth. Holcim, the second largest cement producer in the world, has a turnover of $9.4 billion in 2002-03.

To make open offer

in ACC

Ambuja Cements and Holcim have agreed to make ACIL the platform for the strategic alliance and in line with this objective, Holcim, through ACIL has announced an open offer to acquire a majority shareholding in ACC. ACIL already owns 13.8 per cent shareholding in ACC bought from the Tatas in 2000. Holcim through ACIL is now offering ACC shareholders Rs. 370 per share by way of an open offer to increase ACIL's shareholding in ACC up to 50.01 per cent.

ACIL also owns 94 per cent of Ambuja Cements Eastern Ltd. (ACEL), which is one of the most profitable cement companies in India. Holcim through ACIL is also making an open offer to acquire its entire public shareholding from minority shareholders at Rs 70 per share.

Holcim proposes to invest around $800 million in India, which will be financed entirely through internal sources and existing credit facilities. This is by far the largest foreign direct investment (FDI) in the Indian cement industry.

ACC is the second largest cement producer in India with 12 cement plants and 3 grinding plants with a current capacity of 18.2 million tonnes annaully and a national market share of about 13 per cent.It also has a presence in other construction materials.

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