Ultratech in talks with rival cement firms, PEs on asset divestiture plans

India's largest firm in the sector seeks more time from Switzerland's Holcim to make a bid for Ultratech and ACC.

Ultratech has started talks with rival cement companies and private equities (PE) to sell plants in Western and Central India, aiming to win the Competition Commission of India’s approval in case it acquires Swiss major Holcim's 63 percent stake in Ambuja Cements.

A banker said Ultratech, while making an “aggressive” non-binding bid, has sought more time from Holcim to close the deal as any combination between it and Ambuja Cements and Ambuja subsidiary ACC will trigger the CCI’s objections. Such a bid will lead to divestments of assets from Ultratech, Ambuja and ACC. Ultratech, India’s largest cement major, will talk to all rival players interested in acquiring its cement plants within a deadline, said the source.

Spokespersons for Holcim and Ultratech declined to comment.

“The offer by Ultratech is very aggressive though the other two bidders, the Adani group and JSW have the options to better it once Holcim selects any of them for exclusive talks,” said a source close to the development. PEs Ultratech has approached want to make an investment in the Indian cement industry.

Ultratech has 120 million tonnes per annum of capacity. Ambuja, India's number two cement firm, and its subsidiary, ACC, have a capacity of 64 mtpa. Most of the divestment of assets will be in Gujarat and Central India where the acquisition will cross the CCI threshold.

Ultratech has already submitted the divestiture plan to Holcim and has details on plants which Ultratech and Ambuja/ACC needs to sell to get the CCI’s approval. When compared to other two bidders, Ultratech will also take an additional six to eight months to complete the deal.

Ambuja Cements shares closed at 4 per cent up on Thursday at Rs 373 a share to give it a total valuation Rs 74,000 crore even as the BSE Sensex was down 2.1 per cent.

“While Holcim is seeking an early exit, Ultratech’s higher offer will cause Holcim to delay the sale while other two bidders will have to re-think their bidding strategy,” the banker said. “The ball is in Holcim’s court.”