Holcim deal: Ambuja to seek shareholders' nod

Transaction was to be executed through merger of Holcim India, wholly-owned financial arm, with Ambuja

Ambuja Cements will seek shareholders’ approval for its proposed multi-layered deal with Holcim, it said on Wednesday.

The transaction was to be executed through a merger of Holcim India, a wholly owned financial arm, with Ambuja. Holcim India currently owns 9.76% stake in Ambuja and 50.01% in ACC.

As part of a two-tiered process, Ambuja will first acquire 24% in HIPL for Rs 3,500 crore in cash. It would be followed by a stock merger between Holcim India and Ambuja. Holcim would then receive fresh shares of Ambuja, thereby resulting in the Swiss cement maker’s stake in Ambuja increasing to 61 percent.

Ambuja, in a statement, said the nod of minority shareholders was one of the conditions while purchasing 24 percent stake in Holcim India.

The company’s comment comes after Sebi’s observations about the deal were reported in various papers and news channels. The market regulator observed both legs of the transaction were inter-dependent.

“The Company reiterates that both steps of the transaction (namely i) Purchase of 24% shares in Holcim India for cash and ii) amalgamation of Holcim India with the Company) were always inter-linked as disclosed in ACL's stock exchange filing of July 24, 2013, i.e one cannot be completed without the other and minority shareholder approval of the scheme per the Sebi circulars was one of the condition precedents to the 24% purchase of Holcim India by ACL,” said Ambuja in the statement.

Earlier, companies had to obtain just High Court approval and no-objection certificates (NOC) from exchanges. However, Sebi issued a circular, in February this year, directing all listed companies to seek its approval for any merger, demerger and amalgamation deals.

The move was aimed at protecting minority interest as several companies were found putting public shareholders in disadvantageous situations through complex restructuring process.

The Holcim-ACC-Ambuja was the first major deal that had to seek the market regulator's clearance.