Ultra-Tech cements to buy a major stake (32.72%) in Indian Cement's (Chennai super kings sponsors), Click here to read the full article about the acqusition:

 

The Rs 7,100 crore deal will allow UltraTech to more effectively serve the Southern markets and widens its journey towards a capacity of over 200 MTPA.

UltraTech Cement, India's largest cement manufacturer, announced on Sunday its intention to acquire a 32.72 percent stake in India Cements from its promoters and their associates. The deal, valued at Rs 3,954 crore, will initiate an open offer that could increase UltraTech's total expenditure to Rs 7,100 crore if it is fully accepted. 

Following the execution of share purchase agreements and the receipt of regulatory approvals, UltraTech, owned by the Aditya Birla Group, will disburse Rs 3,954 crore at Rs 390 per share to acquire the stake in India Cements. This transaction will also necessitate a mandatory open offer at the identical price of Rs 390 per share.

"UltraTech will proceed with the open offer after receiving all necessary regulatory approvals," stated UltraTech in its announcement. Last month, UltraTech invested Rs 1,889 crore to acquire a 22.77% equity stake at Rs 268 per share. This stake was purchased from the open market, specifically from billionaire investor Radhakishan Damani and his affiliates. "Following this financial investment in June, the promoter group expressed their desire to sell their stake in the company, and we deemed it suitable to acquire it," UltraTech explained.

India Cements boasts a total grey cement capacity of 14.45 million tonnes per annum (MTPA). Of this capacity, 12.95 MTPA is located in the South, particularly in Tamil Nadu, and 1.5 MTPA in Rajasthan. Completion of the transaction is contingent upon regulatory approvals and is anticipated within six months.

Kumar Mangalam Birla, Chairman of Aditya Birla Group, stated: "UltraTech Cement's investments, both organic and inorganic, over the years are aimed at positioning India as a global building solutions leader. The opportunity with India Cements is thrilling as it allows UltraTech to more effectively cater to the Southern markets and hastens our journey towards a capacity of over 200 MTPA."

Hi! Invest in US Stock's at Zero subscription and withdrawal charges, Click here to download the app:  https://phon.pe/TI2407232224499405957186

Jyoti Gupta, an analyst at Nirmal Bang, commented, "For UltraTech, adding capacities through such an acquisition in a market where they already possess capacities and have expansions in progress seems commercially imprudent. Focusing on capacity utilisation could result in sustained low cement prices, thereby affecting financial outcomes."

UltraTech's July investor presentation revealed that the company operates 25 MTPA in South India and intends to add another 10 MTPA by FY27, not including the 10.75 MTPA expected from the Kesoram Industries transaction. 

Hi! Invest in US Stock's at Zero subscription and withdrawal charges, Click here to download the app:  https://phon.pe/TI2407232224499405957186

The company announced on Sunday that the recent deal allows for a re-evaluation or postponement of its existing capacity expansion plans in the Southern market, leveraging the ready-to-use assets of India Cements. This is seen as beneficial for UltraTech's sole integrated unit in Tamil Nadu, the Reddipalayam Cement Works, which has limited limestone availability and a finite lifespan.

 With the latest acquisition, UltraTech will extend its lead over its nearest competitor, Adani Cement, by an additional 14.5 MTPA. As of June, UltraTech's operational capacity stood at 149.5 MTPA in India and 154.9 MTPA globally, including overseas operations.

 In contrast, Ambuja Cements-ACC, backed by Adani, had a capacity of 77 MTPA as of March, not accounting for acquisitions in progress. The top four cement manufacturers in India are aggressively expanding their capacities to meet the country's infrastructure-driven demand. 

Do you know almost 45 Crore plus Indian users use this app to pay their needs, Click here to download the app: https://phon.pe/g5hv9bd4

UltraTech aims to reach 200 MTPA by 2028, while Adani targets 140 MTPA within the same timeframe. Ambuja Cements, supported by Adani, has been actively acquiring companies, especially to increase its capacity in South India. Analysts interpret UltraTech's recent actions as a strategy to prevent Adani from acquiring India Cements.

 Nonetheless, some are skeptical about the benefits of the deal for UltraTech, with Gupta from Nirmal Bang suggesting that it would have been more advantageous for a conglomerate like Adani, which is seeking to bolster its pan-India presence.