Move to help Swiss major pip Lafarge in capacity stakes

India is the new battleground to determine the world leader in the cement industry. Holcim, the $9.4 billion Swiss cement maker, is set to become the world's largest cement company if it manages to wrest control of the Associated Cement Companies (ACC), overtaking the current leader, French cement major, Lafarge.

Holcim's annual production capacity will go up to 166.2 million tonne if its proposed offer to take control of ACC succeeds. Lafarge's cement capacity stands at 150 million tonne.

While Holcim has a presence in 70 countries with more than 48,000 employees, the euro 13.6 billion Lafarge employs over 75,300 across 75 nations.

Holcim, in consortium with Gujarat Ambuja Cement, has made an open offer at Rs 370 a share to acquire up to 50.1 per cent stake in ACC.

However, the success of the offer becomes uncertain as the market price of the stock is ruling over the offer rate. The ACC share closed at Rs 375.7 on the Bombay Stock Exchange on Friday.

If the open offer is successful, Holcim will have an additional 18.3 million tonne of annual production capacity under its aegis, taking its global capacity to 164.2 million tonne, almost 10 per cent more than Lafarge's current global capacity.

Holcim's production capacity will increase by another two million tonne to 166.2 million tonne with acquisition of Gujarat Ambuja Eastern Ltd.

The Swiss cement maker has signed a deal with Gujarat Ambuja Cement late last month to acquire a 67 per cent stake in Ambuja Cement India Ltd (ACIL), the investment arm that holds a 13.8 per cent stake in ACC and a 94 per cent stake in Ambuja Cement Eastern.

Holcim has also made an open offer through ACIL to acquire the 6 per cent balance equity of Ambuja Cement Eastern Ltd at Rs 70.

Stock market sources said: "Since the acquisition of the controlling stake in ACC becomes important to determine the pecking order in the global cement industry, Holcim would try its best to make the open offer a success." They suggested that Holcim may revise the offer price, if required.

Market is also abuzz with speculation that Lafarge is teaming up with an Indian company to come out with a counter bid. A Lafarge executive, however, declined to comment on the issue.