UltraTech Cement, India's leading cement producer, announced on Sunday that its board has greenlit a $472 million transaction to acquire a controlling stake in India Cements, enhancing its presence in the southern states of India.
This strategic move occurs amid intense competition among India's premier cement companies to capture a larger share of the market, which is projected to nearly double from 2022 levels to $49 billion by 2029, fueled by anticipated infrastructure development under Prime Minister Narendra Modi's government.
As part of the Aditya Birla Group, UltraTech plans to purchase a 32.72% stake in India Cements from its promoters and affiliates, building on the 23% stake it acquired in June. Following the June acquisition, the promoters of India Cements proposed selling their remaining shares to UltraTech, as detailed in a company statement.
UltraTech will disburse 39.54 billion rupees ($472.38 million) at 390 rupees per share for the 32.72% stake, according to the statement. This acquisition will necessitate an open offer, enabling UltraTech to purchase additional shares from public shareholders at the same price, which represents a 4.3% premium over India Cements' last closing price.
The market had anticipated UltraTech's takeover of India Cements, a development that aligns with the Birla group's goal to achieve a production capacity of 183.5 million metric tons by the fiscal year ending March 2027, according to Ashutosh Murarka, a research analyst at Mumbai-based Choice Broking.
"We foresee the deal momentum in southern India to persist," Murarka commented.
