Switzerland-based Holcim Group has decided to consolidate its holding in ACC through Ambuja Cements. As a first step, Ambuja Cements will acquire 24 per cent stake in Holcim India from Holderind Investments, Mauritius, for Rs 3,500 crore. This will be followed by the merger of Holcim India into Ambuja. The transaction will result in Ambuja holding 50 per cent stake in ACC, in which Holcim India currently holds 50.01 per cent.
The merger swap has been fixed at one Ambuja share for 7.4 Holcim India shares, translating into an implied swap ratio of 6.6 Ambuja shares for every ACC share.
Based on the swap ratio, Ambuja will issue 58.4 crore new equity shares of the company to Holcim as a consideration for the merger.
Post merger, the expanded capital base of Ambuja (after cancellation of the shares held by Holcim India in Ambuja and issuance of new shares) will increase 28 per cent to 197.75 crore shares.
Holcim will then own 61.39 per cent of Ambuja which, in turn, will own 50.01 per cent in ACC.
Over the next two years, Ambuja will invest Rs 3,000 crore to enhance its holding in ACC by 10 percentage points without triggering a mandatory open offer. The scheme of amalgamation will not lead to any open offer for shareholders.
Ambuja Cements intends funding the cash transactions through internal accruals.
Cost savings
Onne Van Der Weijde, Managing Director, Ambuja, said the consolidation will lead to a saving of at least Rs 600 crore per annum by way of synergy.
“We see lot of saving in the logistic cost, sharing of production facility and sharing backend operations. However, we intend to maintain both the brands separately and would not de-list from the stock exchange at any point of time,” he said.
On the timing of the deal, Weijde said there are challenges on the demand front in the short term, but the prospects are still bright and the expansion plans made by both the companies are proof enough.
Narotam Sekhsaria, Non-Executive Chairman, Ambuja and ACC, said this transaction promotes greater cooperation between the group companies and unlocks significant synergies over time.
Investment in the expansion project at Marwar Mundwa is a positive and big next step forward and shows Holcim’s commitment, he said.
ACC shares were down one per cent at Rs 1,231 on Wednesday while Ambuja Cements tumbled 2.9 per cent at Rs 191.1.