Holcim wants ACC to sell non-core business

ACC has to offload 76% stake in Everest Industries.

Even before it takes formal control of Associated Cement Companies (ACC), Swiss cement giant Holcim says it has initiated talks with a potential buyer for Everest Industries Ltd (EIL). EIL is an ACC subsidiary.

In a public announcement to ACC shareholders today, Holcim said it would get ACC to divest its 76.01 per cent stake in EIL, a building and constructions company which ACC had acquired a majority stake in only two-and a-half years ago.

"Since EIL's business is not the core business of Holcim, Holcim India and Holcim Mauritius will take necessary steps towards ACC divesting its entire holding in EIL, subject to necessary approvals," Holcim said in the public announcement.

ACC Executive Director AK Jain said, "This matter has yet not been discussed by the ACC board as we have not been approached formally."

Pressed further to explain whether EIL formed a core business for ACC, Jain said: "It is difficult to define core and non-core. But the fact remains that we had bought a majority stake in EIL about two and a-half years ago."

Holcim yesterday entered into a strategic alliance with Gujarat Ambuja Cement to acquire a majority stake in an investment company that holds a 13.83 per cent in ACC.

Ambuja Cement India will own 50.01 per cent stake in ACC at the end of a three-step process, culminating in an open offer to ACC shareholders at Rs 370 per share.

GACL can exit by June

Gujarat Ambuja Cement (GACL) has the option of exiting its investment in ACC as early as June 2005. GACL had, in 2000, acquired the 13.83 per cent stake in ACC from the Tatas, the promoters then, amid great controversy.

The potential acquirer, the Holcim group, in the announcement to ACC shareholders, said GACL had a "right to put (sell) all or part of the 33 per cent held by GACL in Ambuja Cements India (ACIL) ... at any time on or after June 30, 2005."

Anil Singhvi, executive director, Gujarat Ambuja, said, "We have just entered into this partnership and at this moment, we do no have any intention to exit."

Holcim also said it reserved the right to demand to buy out (call option) GACL "any time on or after January 1, 2008".

GACL had bought a 14.45 per cent stake in ACC between December 1999 and March 2000. The stake was, however, diluted to 13.83 per cent after ACC floated a global depository receipts issue.