Financial Daily from THE HINDU group of publications
Sunday, Jan 23, 2005
Financial Daily from THE HINDU group of publications Sunday, Jan 23, 2005 |
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Investment World
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Insight Corporate - Mergers & Acquisitions Ambuja Cement India: A cash cow
1999: Gujarat Ambuja acquires the 14.4 per cent stake held by the Tatas in ACC at Rs 370 per share in two tranches, at a cost of about Rs 900 crore. This is bankrolled by debt. The deal is positioned as a `strategic alliance' between ACC and Gujarat Ambuja. 2000: Gujarat Ambuja presses ahead with plans to cut the debt burden. Ambuja Cement India is created as an investment vehicle and is vested with the group's 94.1 per cent stake in Ambuja Cement Eastern (which was Modi Cements till it was acquired as a sick company for Rs 166 crore) as well as the stake in ACC. 2000: Gujarat Ambuja picks up a 60 per cent stake in Ambuja Cement India for Rs 857 crore with AIG and the Government of Singapore Investment Corp take the rest for Rs 577 crore (price of Rs 30 per share). The agreement with the FIIs provides for an exit facility at the end of five years.
2000: Gujarat Ambuja transfers its holdings in ACC as consideration for its stake in Ambuja Cement and receives cash of about Rs 575 crore brought in by the two FIIs. 2000: Gujarat Ambuja makes a profit of about Rs 280 crore on transfer of the Ambuja Cement Eastern to Ambuja Cement India. 2005: Holcim of Switzerland buys out the FIIs for about Rs 875 crore. It is to invest Rs 2,620 crore ($600 million) to acquire 67 per cent in Ambuja Cement India. The latter's equity will increase from Rs 476 crore to Rs 850 crore. Holcim takes its stake at Rs 47 per share. Gujarat Ambuja will have a 33 per cent stake. Due in 2005: An open offer by Ambuja Cement India to buy 36.2 per cent of ACC's equity and raise its stake to 50.01 per cent. The offer will be at Rs 370 per share; ACC's board has given a clearance for the open offer. Also, an open offer to buy the 5.9 per cent that is not held by the Ambuja group in Ambuja Cement Eastern at Rs 70 per share. The open offers will be funded by the $600 million that is to be infused by Holcim into Ambuja Cement India. Due in 2005: A reconstitution of the board of Ambuja Cement India to reflect the new shareholding pattern (see accompanying charts).
S. Vaidya Nathan
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