UltraTech Cement Ltd’s board has approved a series of transactions to significantly increase its stake in India Cements Ltd. Initially, UltraTech purchased a 22.77 percent stake in India Cements in June at Rs 268 per share. In its latest move, UltraTech will acquire an additional 32.72 percent stake from the promoters and their associates at Rs 390 per share, amounting to Rs 3,954 crore.
This acquisition will bring UltraTech’s total ownership in India Cements to 55.49 percent, triggering a mandatory open offer under the Securities and Exchange Board of India (Sebi) regulations. As part of this compliance, UltraTech has announced an open offer to purchase up to 8.05 crore shares, or 26 percent of the equity, from public shareholders at Rs 390 per share, totaling approximately Rs 3,142.39 crore. This offer price is 4 percent higher than the closing price of India Cements on the previous Friday, reflecting UltraTech's confidence in the company's future potential and value.
In addition to these moves, UltraTech Cement has entered into a share purchase agreement (SPA 2) to buy 1.99 crore equity shares (6.44 percent of the equity share capital) from Rupa Gurunath, Trustee of Security Services Trust, and Rupa Gurunath, Trustee of Financial Service Trust, both part of the promoter group, for Rs 778.21 crore. Furthermore, UltraTech will acquire 1,33,16,783 equity shares (4.30 percent of the equity share capital) from Sri Saradha Logistics Private Limited for Rs 519.35 crore.
These transactions, collectively termed as the “Primary Acquisition,” are subject to statutory and regulatory approvals. If all approvals are granted and the transactions are completed, UltraTech will have a controlling stake in India Cements, significantly consolidating its position in the Indian cement industry.
UltraTech's strategic move is seen as a step to fortify its market presence and expand its footprint in the southern part of India, where India Cements has a strong base. Analysts believe that this acquisition could lead to operational synergies, improved efficiencies, and cost reductions for UltraTech, thereby enhancing its competitive edge in the cement market.
The acquisition also underscores the ongoing consolidation trend in the Indian cement industry, as companies seek to leverage economies of scale and improve market share. For UltraTech, this acquisition is not just about increasing capacity but also about strategic geographical expansion and tapping into new customer bases.
In the broader context, UltraTech’s aggressive expansion strategy is reflective of its ambitions to maintain its position as the market leader in the Indian cement industry. The company’s focus on acquisitions and capacity expansions indicates its long-term vision to dominate the sector and meet the growing demands of the Indian infrastructure and real estate markets.
Overall, UltraTech Cement’s acquisition of a controlling stake in India Cements represents a significant development in the industry, with potential positive implications for both companies and the market as a whole. The move is expected to create substantial value for shareholders and strengthen UltraTech's market leadership in the Indian cement industry.
