9 firms line up for Lafarge India biz

The French cement giant has put the business on the block after receiving approval from the CCI to meet its global merger process with Swiss giant Holcim

Lafarge India has received nine non-binding bidders for its 11-million-tonne asset, valued at around Rs 10,000 crore.

The French cement giant has put the business on the block after receiving approval from the Competition Commission of India to meet its global merger process with Swiss giant Holcim.

The bidders include international strategic players CRH, Heidelberg and China Resources, along with domestic players JSW Infra, Piramal Enterprises and Ramky Infra who have respectively tied up with private equity (PE) firms CVC Capital, Goldman Sachs Private Equity and Carlyle.

There is also a consortium of PE firms Blackstone, Baring Asia and CPPIB which has submitted a bid. Other PE giants Bain Capital and Advent International have also submitted their bid individually.

"Now these bids will be shortlisted and then the due diligence will start," said a person familiar with the bidding process. "Following the due diligence the final binding bids will be sought and then the buyer's name will be announced. The whole process will take about two to two-and-a-half months," he said. The French cement giant appointed Citi and Arpwood Capital as investment bankers to sell the entire India operations last month. This is the second attempt by the company to meet local anti-trust regulations, after its plan to sell its 5.15-million tonne cement capacity in Chhattisgarh and Jharkhand to Birla Corporation for Rs 5,000 crore ran into trouble. A change in mining law under the The Mines and Minerals (Development and Regulation) Act prohibited transfer of mining rights in case of an asset sale.

This compelled the firm to sell its entire business which allows transfer of mining rights.

Lafarge and Swiss cement giant Holcim announced a global merger in April 2014, to create the world's largest firm in the segment. This raised eyebrows of anti-trust watchdogs in several countries.

In India, Holcim, through its control of Ambuja Cement and ACC, has 60 million tonne (mt) capacity. Lafarge has 11 mt in India, of which 7.8 mt (70 per cent) is in Chhattisgarh, Jharkhand and West Bengal. Holcim's ACC and Ambuja have capacities of 6.1 mt and 4.6 mt, respectively, in the eastern region. A simple merger would have led to a capacity of 18.5 mt in the eastern states for Holcim-Lafarge, which would have been a little more than 40 per cent of the estimated 46 mt of total capacity in the region.

This led to CCI scrutiny. In August 2015, Birla Corp had agreed to buy the proposed assets, along with brands Concreto and PSC, and mineral rights over adequate reserves of limestone. After Lafarge India's inability to consummate the deal along with mining rights, Birla Corp said, "The company has since discussed the matter with its legal advisors and has decided not to accept their contention and is in the process of taking appropriate legal measures, in consultation with lawyers."

Following this, Birla Corp also acquired the 5 mt capacity Reliance Cement for Rs 4,800 crore, in February. "No major hurdle is expected from Birla Corp for the sell-off," inform people familiar with the sale process.

THE BIDDERS

FOREIGN PLAYERS

• CRH
• Heidelberg Cement
• China Resources

PE CONSORTIUM

• Blackstone-Baring Asia-CPPIB

INDEPENDENT PES

• Bain Capital
• Advent International

INDIAN STRATEGIC PLAYERS

• JSW Infra and CVC Capital
• Piramal Enterprise and Goldman Sachs Private Equity
• Ramky Infra and Carlyle