Swiss cement maker Holcim on Tuesday acquired 3% stake in ACC, India’s second-largest cement firm, for around Rs 529 crore. AV Birla-controlled UltraTech is the largest cement maker in the country. Subsequent to the share purchase, Holcim’s holding in ACC has moved up to about 41%.
Market sources said the shares were bought from a clutch of investors in multiple deals, and stock market data showed 5.86 million shares changed hands at an average price of Rs 899 per share, valued at $129 million. Enam Securities is believed to have brokered the deal. Holcim, the world’s second-largest cement maker, already holds nearly 38% in ACC and 30% in India’s third-largest cement maker Ambuja Cements, formerly Gujarat Ambuja Cements (GACL).
The latest purchase price was more than double the price of Rs 370 a share which Holcim offered to minority holders in 2005 when it first bought a minority stake in ACC, with an intention to increase its holding to 50%. In a complex and multi-layered deal in 2005, Holcim had teamed up with GACL to acquire controlling stake in ACC and increase the stake further by end-2007.
Currently, Holderind Investments, the investment arm of Holcim, holds about 20% in GACL and the Sekhsaria family-controlled Ambuja Cement India holds around 10%.
The Gujarat Ambuja-Holcim agreement provided Gujarat Ambuja with a `put’ option to sell its 33% stake in Ambuja Cement India. Put option is a financial contract between the buyer and the seller of shares which allows the `option holder’ a right and not an obligation to sell the share.
It could, as per the agreement, do so at any time between June 2005 and December 2007. According to the arrangement, if the option is not exercised, Holcim would have a `call’ option to buy the stake after January 1, 2008. On Tuesday, ACC shares were up 1.6% to close at Rs 886 on the Bombay Stock Exchange (BSE).
Holcim has been raising its stake directly and indirectly in both ACC and Ambuja Cements India and the market is speculating that it wants the two companies to merge eventually to compete better in India’s consolidating cement sector.
However, the chairman of ACC in March said there were no plans to merge the two firms. Market analysts said a merger was unlikely to take shape since the two companies would not gain much from being put together. In March, Ambuja Cement India, which is 78%-owned by Holcim, had raised its stake in ACC to 37% from 35.15% while Holcim bought a further 0.29% through another of its units.
Source : Economic Times