BANGALORE: German cement and building materials giant HeidelbergCement AG (HC AG) has consolidated its presence in the Indian cement market by acquiring a controlling stake of 51 per cent in Mysore Cements Limited, the ailing cement unit managed by the S K Birla group.

Board approval

The decision to divest a majority stake in the company was approved by the board of Mysore Cements at a meeting held in Kolkata on Tuesday.

Portland cement maker Mysore Cements was incorporated by Sarangapani Mudaliar in technical and financial collaboration with Kaisers of the U.S. The company has a cement capacity of 2.095 million tonnes annually with plants at Ammasandara in Karnataka, Damoh in Madhya Pradesh and Jhansi in Uttar Pradesh and sells cement under the brand name `Diamond.'

Mysore Cements said in a statement that it has been looking at options for rebuilding the net worth of the company and addressing its current debt overhang besides creating growth opportunities.

The company and the promoter group have decided to enter into a joint venture relationship with the HeidelbergCement group.

According to plans, Mysore Cements proposes (subject to the approval of shareholders and other necessary approvals) to issue and allot up to 6.65 crore equity shares to the HeidelbergCement group by way of a fresh issue on a preferential basis to raise long-term resources for the company. The issue price has been fixed at Rs. 54 per equity share (a premium of over 13 per cent over the BSE closing price on July 18 and about 23 per cent over the minimum issue price under relevant SEBI rules). As per the deal, the S K Birla group will sell 1.34 crore shares (at Rs. 58 per share excluding non-compete fees of Rs. 14.50 per share) out of its present holdings to the HeidelbergCement group, which will be making an open offer to the shareholders of the company in accordance with the SEBI take-over code at Rs. 58 per share (a premium of over 21 per cent over the BSE closing price on July 18).

The acquisition comes barely four months after Heidelberg Cement concluded a 50:50 joint venture agreement in March with Mumbai-based slag cement maker Indorama Cement, owned by the S P Lohia group. Indorama's cement grinding plant has a capacity to produce one million tonnes of cement.

HeidelbergCement said in a statement that it was committed to enhance its presence in India in the short to medium term through acquisitions, joint ventures and greenfield projects.

An extraordinary general meeting (EGM) has been convened on August 16 here to get the approval of the shareholders, according to PTI

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