Holcim buys Ambuja for $1 bn

The move marks the latest foray by the Swiss firm in the world’s second-largest cement market. Holcim already controls 34 per cent stake in Associated Cement Companies (ACC), the second-largest cement producer, through its holding in a Gujarat Ambuja group firm it acquired in early 2005.

Gujarat Ambuja, India’s third-biggest cement maker with a 13-million-tonne capacity, said its promoters sold 200 million shares at Rs 105 each, including a non-compete fee of Rs 15 per share. Holcim paid the equivalent of more than $200 a tonne for Gujarat Ambuja, nearly double what it paid for the ACC stake last year.

The founders, Sekhsaria and Neotias, held 23.8 per cent of Gujarat Ambuja before the sale. “I don’t think that the change in ownership will lead to any change in the demand-supply dynamics in the cement industry. This acquisition will turn Holcim into the market leader with a capacity of over 31.5 million tonnes,’’ said Toral Munshi, Head of Research, India Infoline.

Holcim said its offer for 20 per cent more of the firm would be at about Rs 90 per share. As per the Securities and Exchange Board of India’s takeover code, Holcim is required to make an offer to all shareholders to acquire up to a further 20 per cent of Gujarat Ambuja share capital before board control can be transferred.

As a fallout of the acquisition, Narotam S Sekhsaria resigned as managing director and was appointed as non-executive director not liable to retire by rotation and elected as vice-chairman of the company by the board. Anil Singhvi, whole-time director of the company was appointed managing director for a period of five years on the same terms and conditions that were applicable to Sekhsaria.

Vinod Kumar Neotia (non-executive director), Harshvardhan Neotia (non-executive director) and Pulkit Sekhsaria (whole-time director) have also resigned as directors of the company.

Speculation had been rife in the last few months that the founders of Gujarat Ambuja would sell part of their stake to Holcim.

Shares of Gujarat Ambuja, which jumped as much as 6.6 per cent to Rs 97.95 at the open, later closed down by 1.58 per cent at Rs 90.45 on the BSE. The shares have gained nearly 40 per cent since November when speculation about the Holcim talks began.

With the latest takeover, Holcim—with a combined capacity of around 31.5 million tonnes—will be marginally ahead of the Aditya Birla group which has a capacity of 31 million tonnes per annum. Last year, Holcim had bought 67 per cent of Ambuja Cement India, a group firm of Gujarat Ambuja, a year ago. Ambuja Cement India owns 34 per cent of ACC and 97 per cent of Ambuja Cement Eastern Ltd.