Active Stocks
Thu Mar 28 2024 15:59:33
  1. Tata Steel share price
  2. 155.90 2.00%
  1. ICICI Bank share price
  2. 1,095.75 1.08%
  1. HDFC Bank share price
  2. 1,448.20 0.52%
  1. ITC share price
  2. 428.55 0.13%
  1. Power Grid Corporation Of India share price
  2. 277.05 2.21%
Business News/ Companies / News/  How dispute between Holcim and Lafarge over merger deal affects India
BackBack

How dispute between Holcim and Lafarge over merger deal affects India

The deal, which will now be renegotiated, would have vaulted the entity resulting from a combination of their local operations to India's biggest cement maker

Switzerland-based Holcim on Monday said that it was no longer pursuing the merger in the current form with French cement firm Lafarge. Photo: BloombergPremium
Switzerland-based Holcim on Monday said that it was no longer pursuing the merger in the current form with French cement firm Lafarge. Photo: Bloomberg

Mumbai: The delayed merger between Holcim Ltd and Lafarge SA would offer a respite to UltraTech Cement Ltd, India’s largest cement maker by capacity.

The deal, which will now be renegotiated, would have vaulted the entity resulting from a combination of their local operations to India’s biggest cement maker.

Holcim’s two local units, ACC Ltd and Ambuja Cements Ltd, have a combined annual capacity of 58.75 million tonnes (mt), making it the country’s second-biggest maker of the building material.

Lafarge has a total cement production capacity of 11mt in India, according to its website.

Aditya Birla Group company UltraTech has the capacity to produce over 60.2mt. In December, UltraTech agreed to buy two cement plants of Jaiprakash Associates Ltd in Madhya Pradesh, which would take its capacity to 65 mtpa.

To be sure, UltraTech is executing other projects that are aimed at raising its capacity to 71mtpa when they are completed.

“Firstly, the potential break-up (of the merger deal) will stop Holcim or Lafarge selling its assets. Obviously, absence of consolidation will help UltraTech Cement," an executive with a domestic brokerage said on condition of anonymity.

India’s anti-trust regulator, Competition Commission of India, had asked Holcim-Lafarge to sell some of its eastern India assets to ensure fair competition, according to the executive.

“The Holcim-Lafarge combine could have posed a threat to UltraTech as the former will have an edge in terms of pricing and production synergies. Now, with the deal falling through, UltraTech will not have any imminent threat from an international company," he added.

According to estimates by Nitin Bhasin, infrastructure analyst at Ambit Capital Pvt. Ltd, in April 2014, the top six cement companies in India accounted for nearly 200mt of the country’s total 350mt of cement-making capacity. UltraTech, ACC and Ambuja are the top three in terms of capacity.

“Holcim, along with ACC and Ambuja, was set to consolidate its presence in India following the merger with Lafarge globally. Over the last 2-3 years, while Lafarge was adding capacities in India, Holcim was slow on that front. This potential break-up will slam the brakes on the Holcim’s hopes of becoming possibly the largest cement entity in India," Bhasin said. (Ambit and/or its associates have a financial interest in ACC.)

Switzerland-based Holcim on Monday said that it was no longer pursuing the merger in the current form with French cement firm Lafarge.

On 4 March, a Holcim spokesperson said by email, “ We have already received 14 clearances, representing more than half of the jurisdictions where we notified. The worldwide regulatory process is on-going and we expect to receive further approvals in a timely fashion—on track with our plan to complete the merger by H1 2015."

This was in response to a query Mint had sent to the company requesting an update on the planned global merger of Lafarge and Holcim.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 17 Mar 2015, 12:12 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App

Chat with MintGenie