ACC, Ambuja record strong trade, before paring gains

On Tuesday, state-run insurers had voted against Holcim's restructuring deal

Shares of two large Indian cement makers — ACC and Ambuja Cements — traded strong during most of the session on Wednesday, despite reports suggesting state-run insurers had voted against the restructuring of Holcim’s Indian operations.

Till the fag end of the trading session, the ACC stock had surged 1.7 per cent, while the Ambuja stock rose 1.2 per cent on BSE, before losing ground. A sharp decline in the benchmark indices in the last thirty minutes of trade triggered a fall in both the counters.

Ambuja pared all gains to close 1.2 per cent down, while ACC closed with a gain of 80 basis points.

The Holcim restructuring deal, signed in July this year, involved restructuring in two phases. Holcim was to raise its stake in Ambuja from 50.55 per cent to 61.39 per cent. Ambuja, in turn, would buy Holcim’s stake in ACC. At a later date, Ambuja would further increase its stake in ACC by 10 percentage points for an investment of up to Rs 3,000 crore, through open-market purchases.

Ambuja was to first acquire 24 per cent stake in Holcim India Pvt Ltd (HIPL) for Rs 3,500 crore in cash, followed by a stock merger between the two. HIPL is Holcim’s wholly-owned financial holding company.

Currently, HIPL directly holds 9.76 per cent stake in Ambuja, and 50.01 per cent stake in ACC.

After the merger, HIPL’s stake in Ambuja would stand cancelled and Ambuja would own 50.01 per cent stake in ACC. The swap ratio for the merger was decided as one Ambuja share for 7.4 Holcim India shares, translating into an implied swap ratio of 6.6 Ambuja shares for every ACC share.

Ambuja was to issue 584 million new equity shares to Holcim as consideration for the merger. After the merger, the expanded capital base of Ambuja was to rise 28% and comprise 1,977.5 million shares.