UltraTech to acquire Kesoram's cement business | Mint
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Business News/ Companies / News/  UltraTech to acquire Kesoram's cement business

UltraTech to acquire Kesoram's cement business

UltraTech will issue one share for every 52 shares of Kesoram and the deal is estimated to be valued at ₹5,379 crore.

Following the acquisition, UltraTech’s cement capacity will reach 149.14 million tonne per annum (mtpa), including its overseas operations. age source: PiaxabayPremium
Following the acquisition, UltraTech’s cement capacity will reach 149.14 million tonne per annum (mtpa), including its overseas operations. age source: Piaxabay

New Delhi: UltraTech Cement Ltd, the flagship company of Aditya Birla group, has acquired the cement business of Kesoram Industries in a share-swap deal, according to a filing with the exchanges on Thursday. UltraTech will be issuing one share for every 52 shares of Kesoram, implying an offer price of 173.15 per share, a 34% premium to Kesoram’s last close.

The deal is estimated to be valued at 7,600 crore, including the debt the company will take on from Kesoram.

In October 2023, UltraTech had announced a third round of capex of 13,000 crore to expand capacity to 160 million tonnes (mt). The addition of Kesoram’s business will support the firm in reaching its target of 200 mt. For this transaction, 5,974,301 new equity shares of the company will be issued to Kesoram shareholders on the record date defined in the scheme. It will increase UltraTech’s equity capital to 294.66 crore consisting of 294.7 million equity shares of 10 each, UltraTech said.

Post acquisition, the firm’s annual cement capacity will reach 149.14 mt, including its overseas operations. “The proposed transaction will accelerate the path to achieve the stated goal of 200 million tonnes per annum (mtpa) in India," it said.

It expects to extend its footprint in the highly fragmented, competitive, and fast-growing western and southern markets in the country following the deal. It will help enhance the company's reach in southern markets such as Telangana where the company currently does not have any cement manufacturing plant. The operations will be bolstered by economies of scale resulting from synergies in procurement, logistics, and fixed costs, the company added.

The cement business of the B.K. Birla Group company, Kesoram, consists of two integrated cement units at Sedam, Karnataka, and Basantnagar, Telangana with a total capacity of 10.75 million tonne per annum (mtpa). Out of this total capacity, 8.50 MTPA is clinker-backed and 2.25 mtpa is surplus grinding capacity. The cement business also has a 0.66 mtpa packing plant in Solapur, Maharashtra.

The arrangement for Kesoram’s demerger of its cement business into UltraTech is expected to be consummated within 9-12 months and subject to the approval of shareholders and creditors, stock exchanges, and regulatory authorities.

Bansi S. Mehta Valuers LLP and PwC Business Consulting Services LLP were the registered valuers acting as independent joint valuers with ICICI Securities Limited providing an opinion on the fairness of the valuation. Khaitan & Co., Mumbai acted as the legal advisors, while Trilegal will be advising on Competition Law matters, the company said.

Ahead of the latest announcement, shares of Ultratech today ended at 9,004 on the National Stock Exchange, up 3% from the previous close. Kesoram's shares closed at 139.45, up 5%.

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Published: 30 Nov 2023, 06:55 PM IST
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