Holcim not to raise open offer price for ACC

Holcim, the world's second-largest cement manufacturer, will not increase the offer price for the stock of cement major ACC. This is even as the price of the scrip shot up above the open offer price of Rs 370 to Rs 375.65 on Friday.

"The market can take any view that it wishes. The fact of the matter is that the valuation of $100 per tonne (for taking a 50 per cent stake in ACC) is good. Holcim is not considering a higher price," Promeet Ghosh, senior vice president, DSP Merrill Lynch told Business Standard on Sunday. DSPML is the advisor to Holcim for the acquisition.

The Ambuja-Holcim combine is slated to make an open offer for 37 per cent stake in ACC.

With the success of the open offer, Holcim would get majority holding in the domestic cement major, having already acquired 13.8 per cent in ACC through Gujarat Ambuja Cement's holding in the company.

Holcim's offer price is at a premium above the last acquisition in the cement sector when Grasim paid $80 per tonne for acquiring L&T.

Holcim hopes to get significant share in ACC, but has capped its acquisition price at Rs 370 per share based on the valuation exercise.

With the success of the open offer, Holcim's stake will cross 50 per cent. This will enable the global major to make a foray into the Indian cement market.

Financial institutions (FIs), which collectively hold 18.63 per cent in ACC, feel the offer price is attractive enough.

On January 20, when the joint open offer was made, ACC's share price was quoting at Rs 345.6 on the Bombay Stock Exchange. The offer was just 7 per cent higher than the then closing price.

The scrip had earlier been quoting at Rs 362 prior to the announcement of the open offer.

There was talk in the market of a counter-offer due to which the ACC share has been rising.

Also, without its open offer succeeding, Holcim will not be able to get control of ACC. At the current offer price, Fis and FIIs are unlikely to subscribe.

"Especially when the Indian cement sector has great potential, this is not the time to exit," said the chief of a leading FI.

FIs led by the Life Insurance Corporation (LIC) and state-owned general insurance companies "" the New India Assurance Company and Oriential Insurance Company "" hold 18.63 per cent stake in ACC, with LIC holding 15.72 per cent.

FIIs on the other hand, have a larger stake of 23.27 per cent, and are unlikely to accept the offer at the current price.