The race for Holcim’s stake in Ambuja Cement and ACC combined has intensified with the world’s largest steel company ArcelorMittal showing interest to acquire the asset valued at over $10 billion.
ArcelorMittal is learnt to have held initial talks with Holcim Group and has emerged as a formidable contender. The entry into cement business will enable ArcelorMittal establish its brand across the country and complement the steel business.
On the other hand, Holcim can extract a premium from the new entrants into cement business as it will directly make it the second largest producer in India with pan-India presence.
Ambuja Cement-ACC combine has a production capacity of 66 million tonnes per annum (mpta) which will go up to 80 mtpa after completion of the ongoing expansion projects. The Holcim group holds 63 per cent stake in Ambuja Cements, which in turn owns 50.05 per cent stake in its subsidiary ACC.
Switzerland-headquartered Holcim has been selling off its non-core assets and divested its Brazilian unit for $1 billion in September. It has also put the Zimbabwe business on the block.
Q4 numbers in red
Ambuja Cement reported 30 per cent fall in March quarter net profit at ₹856 crore (₹1,228 crore) even as its income increased three per cent to ₹7,990 crore (₹7,812 crore). Similarly, ACC net profit was down 30 per cent to ₹396 crore (₹563 crore) while its net sales increased three per cent to ₹4,322 crore (₹4,213 crore).
Arcelor Mittal’s investments
ArcelorMittal is competing with a number of other players including Adani Cement and JSW Group for acquiring Holcim’s stake. The JSW Group has offered $4.5 billion in its own equity and $2.5 billion jointly with private equity partners. Others in the race include the country’s largest cement producer Aditya Birla Group company UltraTech Cement and Shree Cement.
ArcelorMittal, which made its presence felt in India with the acquisition of Essar Steel asset three years back, has been bullish on investment in India. In March, it entered into a strategic partnership with Greenko Group, India’s leading energy transition company, to develop 975 MW green energy project with an investment of ₹4,570 crore in Andhra Pradesh.
The project, which is expected to be completed in two years, will supply uninterrupted green energy to its joint venture company ArcelorMittal Nippon Steel India for 25 years.