The Hindu Business Line : S.K Birla Group to sell 51% stake in Mysore Cement to Heidelberg

In a major development, the S.K. Birla Group has decided to sell 51 per cent stake in its loss making Mysore Cement to the Germany-based HeidelbergCement for a whopping $ 94 million (Rs 436.82 crore).

The uniquely structured deal ensures that while Mysore Cement will get Rs 54 per share from Heidelberg for offer of 6.6 crore shares on a preferential basis, the promoters, the S.K. Birla Group will get Rs 58 per share for offer of 1.34 crore shares. The S.K. Birla Group will also get Rs 14.5 per share as non-competing fee. An extraordinary general meeting has been convened on August 16 at Bangalore to get approval of the shareholders in this matter.

Open offer later on

Later, HeidelbergCement will make an open offer to the shareholders at Rs 58 per share. The issue price of Rs 54 translates into a premium of over 13 per cent over the BSE closing price of July 18and about 23 per cent over the minimum issue price under relevant SEBI norms. The issue price of Rs 58 translates into a premium of over 21 per cent over the BSE closing price of July 18. "The deal is favourable to all concerned as it has several merits," the group Chairman, Mr S.K. Birla told Business Line. "First, it takes care of the interests of all concerned, the promoters, the FIs and about 52,000 committed shareholders. Second, the company will get about Rs 300 crore, which is enough to settle all the debts and liabilities. Third, there is scope for further expansion. The capacity can be enhanced easily to 6 million tonnes annually from around 2 million tonnes / 2.2 million tonnes annually. With a strong partner, I have no doubt, the company will henceforth be on a growth path," Mr Birla said.

Second largest cement co

India is considered the second largest cement producing country after China with a current capacity to produce nearly 160 million tonnes per year. Mr S.K. Birla will be the Non-Executive Chairman and Mr Sidharth Birla will be the Director of the company.

In a statement, the company said that the Board and the promoters had been working towards various options for rebuilding net worth of the company as well as addressing its current debt overhang besides creating growth opportunities for the future. Mysore Cement has a nominal cement capacity of 2.095 million tonnes per annum with operations at Ammasandara (Karnataka), Damoh (Madhya Pradesh) and Jhansi (Uttar Pradesh) and sells cement under the "Diamond" brand name in both Central and South India.

Our New Delhi Bureau adds: HeidelbergCement on Wednesday announced the appointment of Mr Ashish Guha as its Country Head, India.

Mr Guha will be responsible for all operations in India including its operations through joint ventures and acquisitions. HeidelbergCement currently has an ownership in IndoRama with a capacity of one million tonnes, primarily catering to the Mumbai market.

Mr Guha will be reporting to Mr Daniel Gauthfer, CEO, Asia, Africe, and West Asia-Benelux HC Trading.

More Stories on : Cement | Mergers & Acquisitions

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page