Holcim's India operation restructuring plan gets FIPB approval

However, since Holcim's proposal is of more than Rs 1,200 crore, it would need CCEA nod too

 

Swiss building materials major Holcim today got FIPB nod to merge holding firm Holcim India with its unit Ambuja Cements as part of the plan to restructure its India operations.

Holcim, which has majority stakes in two leading Indian cement makers - ACC and Ambuja Cements - had announced plan in July to consolidate operations in a cash and share deal in a two-step process, valued at about Rs 14,500 crore.

Sources said the complex deal was cleared by the Foreign Investment Promotion Board (FIPB) at its meeting today.

However, they said, since Holcim's proposal is of more than Rs 1,200 crore, it would require approval of the Cabinet Committee on Economic Affairs (CCEA) headed by Prime Minister Manamohan Singh.

Holcim had said that as part of the rejig process, Holcim India's over 50% stake in ACC will go to Ambuja.

Holcim's stake in Ambuja will rise to 61.39%, from a little over 50% after merger of Holcim India with Ambuja.

Ambuja Cements would merge Holcim India through cash and share transactions. Ambuja will first acquire a 24% stake in HIPL for Rs 3,500 crore, followed by stock merger between HIPL and Ambuja.

As part of the merger, the Swiss firm had said that Holcim will receive 58.4 crore new equity shares of Ambuja resulting in an increase of its ownership in Ambuja from 50.55% to 61.39%.

On the total value of the transaction, Ambuja Cements Managing Director Onne van der Weijde had said it would be about Rs 14,500 crore.

ACC and Ambuja would operate as separate entities with their respective brands, managements and dealer networks, he had said.

At the same time, he said the restructuring will have a synergy benefit of Rs 900 crore per annum accrued from logistics and supply chain.

At present, Holcim has a controlling stake in both ACC and Ambuja. The Swiss major directly owns 40.79% stake in Ambuja and another 9.76% through Holcim India (HIPL). Holcim has 0.29% in ACC directly and 50.01% through HIPL.

Post these transactions, Holcim will have 61.39% stake in Ambuja and 0.29% stake in ACC directly. Ambuja will have 50.01% stake in ACC.

Holcim said it does not have any plan to delist ACC from the Indian bourses, rather it would buy shares through open market purchase.