BackBirla Corp. to take legal action against Lafarge on cement plants deal
Birla Corp. said Lafarge India has informed it of 'their inability to proceed with the agreement'
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Mumbai: Birla Corp. Ltd on Tuesday said it is in the process of taking legal action against Lafarge India Pvt. Ltd after the latter conveyed its inability to proceed with the agreement to sell two of its cement plants.
In August 2015, Lafarge India had agreed to sell the two assets with a combined production capacity of around 5.15 million tonnes to Birla Corp. for a total enterprise value of ₹ 5,000 crore. The deal, however, has not been closed due to uncertainty over whether the ownership of the mines attached to the assets can be transferred. Current rules don’t allow such a transfer.
In a statement to exchanges, Birla Corp. said Lafarge India has informed it of its “inability to proceed with the agreement". “... the company has since discussed the matter with its legal advisors and has decided not to accept their contention and is in the process of taking appropriate legal measures in consultation with lawyers," Birla Corp. said.
The two plants in Chhattisgarh and Jharkhand were put up for sale after Holcim Ltd of Switzerland and France-based Lafarge SA agreed to a global merger last year that required the divestment of certain assets to meet local competition rules.
While the sales were driven by the Competition Commission of India (CCI), it could not approve the deal due to existing rules preventing transfer of mines. A LafargeHolcim spokesperson confirmed it is no longer in discussion with Birla Corp. “The agreement with Birla Corp was subject to approval by CCI... The group remains in dialogue with CCI and will communicate any further updates to the divestment process in India in due time," the spokesperson added.
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