UltraTech Cement Ltd announced on Thursday that it will acquire Kesoram Industries Ltd's cement business in an all-stock transaction worth Rs 5,379 crore, bolstering its capacity ambitions in a highly competitive market.
As part of the agreement, UltraTech will issue one share for every 52 shares of Kesoram and will own two integrated cement plants in Karnataka and Telangana. The transaction suggests an offer price of Rs 173.15, which is a 24.1% premium over Kesoram's previous close of Rs 139.45.
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"The transaction will provide UltraTech the opportunity to extend its footprint in the highly fragmented, competitive and fast growing Western and Southern markets in the country," the company said in a press release.
The planned purchase will help UltraTech get closer to its stated target of 200 million tonnes per annum (mtpa) cement capacity in India, according to the company.
Separately, Kesoram Industries announced the withdrawal of the arm Cygnet Industries' demerger scheme and the approval of the demerged company's arrangement with UltraTech Cement.
Kesoram's cement business is comprised of two integrated cement mills located at Sedam (Karnataka) and Basantnagar (Telangana), with a total capacity of 10.75 mtpa. This overall capacity includes 8.50 mtpa of clinker-backed capacity and 2.25 mtpa of surplus grinding capacity. In addition, the cement company operates a 0.66 mtpa packing facility in Solapur, Maharashtra. UltraTech's stock closed 3% higher on the BSE on Thursday, at Rs 9,000.65.
