 "Birla to bid for global assets of Holcim-Lafarge")
A Birla group insider said work on the bid, deadline for which expires next week, had been on for “quite some time”. The group was interested in acquiring the two European firms’ cement assets to raise its share of the global cement market, he said.
When contacted, a spokesperson for Birla said: “The group does not comment on market speculation.”
| ASSETS UP FOR SALE |
| TOTAL SALES $4.4 bn NUMBER OF EMPLOYEES 10,000 TOTAL ENTERPRISE VALUE Up to $8.8 bn Europe AUSTRIA: Lafarge’s Mannersdorf cement plant FRANCE: Holcim’s assets in metropolitan France, aggregates and ready-mix sites in the Haut-Rhin market; Lafarge’s assets on Reunion islands GERMANY: Lafarge’s assets HUNGARY: Holcim’s operating assets ROMANIA: Lafarge’s assets SERBIA: Holcim’s assets UK: Lafarge Tarmac assets Other countries CANADA: Holcim’s assets MAURITIUS: Holcim’s assets THE PHILIPPINES: LRI’s Bulacan, Norzagaray, and Iligan plants BRAZIL: 3 integrated cement plants, 2 grinding stations, one ready-mix plant Source: Holcim website |
Birla is not alone in his quest for the global assets of Holcim and Lafarge that generate $4.4 billion of sales and have 10,000 people on rolls. Irish cement maker CRH, Cemex and Germany’s HeidelbergCement and Brazilian firm Votorantim Cimentos SA are also considering a joint bid for the entire portfolio. The bids could also be made for assets in a particular geography and, hence, more than 100 bids are expected from around the world.
At least four marquee private equity firms were also eyeing the entire portfolio, media reports from New York said. BC Partners, Advent and Temasek have teamed up to make a bid; while CVC and the Abu Dhabi Investment Authority are the second group of bidders; Singapore’s GIC, Bain and Onex the third group; and Blackstone, Cinven and Canadian pension fund CPP the fourth consortium.
If Aditya Birla Group wins the race, it will become one of the world’s top cement makers. At present, with a capacity of 62 million tonnes per annum, it is among the largest in India. Rivals Holcim and Lafarge, after their merger in India, will have a combined capacity of 57.5 mtpa.
Kumar Mangalam Birla, 47, has built his $40-billion empire with the help of mergers & acquisitions. In 2003, he took over L&T’s cement business and named it UltraTech, and merged it with the group’s cement business owned by Grasim. UltraTech plans to increase its installed cement capacity to 70 mtpa by early 2016. The company last year agreed to buy Jaiprakash Associates’ cement factory in Gujarat for an enterprise value of Rs 3,800 crore.
In 2007, Birla had made headlines globally when he took over Atlanta-based Novelis. The latest bid by UltraTech and other group companies could top the $6-billion acquisition of Novelis.
Later, in 2011, the group bought Columbia Chemicals for $875 million. It is also planning to offload 30 per cent of its stake in a holding company that will house the group’s retail business. The group also bought Pantaloons from Future group for Rs 1,600 crore.
Both Holcim and Lafarge had announced a list of proposed asset disposals as part of their planned merger on July 7 this year to meet the regulatory requirements of anti-competition authorities. The two are proposing to sell plants in Austria, France, Germany, Hungary, Romania, Serbia and the UK in Europe. Apart from European assets, they were also selling assets in Canada, Mauritius, the Philippines and Brazil.
Both companies will continue to consider whether divestments would be necessary where there might be overlaps, or depending on regulatory requirements. They have not announced sale of any plant in India yet. The divestment process will be completed subject to closing of the Holcim-Lafarge merger, expected to create a cement giant with $44 billion of annual sales and a combined stock market value of $55 billion.
Lafarge SA Chief Executive Officer Bruno Lafont had on October 9 said some bidders might seek to snap up all assets that both companies were selling as the cement producers merged.
"There may be buyers that will make an offer for a large chunk, or for everything in Europe or for the whole set," Lafont told reporters at the company's headquarters in Paris.
Lafarge and Holcim have had 100 expressions of interest for the units for sale and "will probably have a lot of firm bids".
Both companies are about to submit their merger plan and their proposed anti-trust remedies to the European Union competition authority, the Lafarge CEO said.
The planned merger is expected to be closed in the first half of 2015.
With additional inputs from Bloomberg