ACC, Ambuja Cements trade weak as merger plans put on hold

Ambuja Cements was trading 4% lower at Rs 253, while ACC down 2% at Rs 1,625 on the BSE at 10:23 am.

Shares of ACC and Ambuja Cements were trading lower by upto 4% on the BSE, after these companies on Monday post market hours said they are not proceeding with the merger at this juncture. The Indian units of LafargeHolcim announced merger plan in May last year.

Ambuja Cements was trading 4% lower at Rs 253, while ACC down 2% at Rs 1,625 on the BSE. On comparison, the S&P BSE Sensex was down 0.3% at 34,344 points at 10:23 am.

"On the basis of a comprehensive evaluation carried out by both the special committee and Board of Directors of the company, the board is of the opinion that there are at present certain constraints in implementing a merger between the company and Ambuja Cements," ACC said in a filing on BSE.

The company is therefore not proceeding with the merger at this juncture, though this remains the ultimate objective, it added.

In a filing to the bourses, Ambuja Cements also said it was not pursuing a merger with ACC at this point of time, though it remains the ultimate goal.

“The announcement is negative for the both ACC and Ambuja Cements, in our view. Although, we highlight that off late both companies have been indicating in their respective investor interactions that merger was only a bull case scenario and not a base case scenario. But the street still seems to factor in some kind of synergy benefits in the estimates,” analysts at Antique Stock Broking said in event update.

“The outlook on fructification of these swap based synergies is hazy, in our view. Managements have also communicated in the past that some part of common procurement based synergies (not part of current announcement) have been realized already. Both companies have been amongst the less preferred names in the space for us,” added note with ‘HOLD’ rating on both the stocks.