Holcim open offer for 20% Ambuja stake

Holcim, the world's second largest cement maker, announced plans to take majority control of Ambuja Cements (ACL) through purchase of 3.9% stake from the Sekhsaria-Neotia family and a subsequent 20% open offer for the minority shareholders.

Priced at Rs 154 a share - an 18% premium over the closing price of Rs 130.50 on Wednesday - the twin move will scale up the Swiss major's shareholding in the country's third largest cement company to marginally over 56% from the existing 32.3%. The move, subject to regulatory approvals, will cost Holcim $1.34 billion (Rs 5,463 crore).

The investment will be financed from internal accruals, Holcim said in a release.

India is the second largest cement market worldwide with high growth potential. ACL has a capacity of 16 million tonne per annum, and is increasing its capacity to 22 million tonne by 2009.

The Sekhsaria-Neotia combine will hold less than 1% stake post the move, but would continue to hold their present positions in the management. While Suresh Neotia would continue as the chairman, Narotam Sekhsaria would be the vice-chairman of the company.

The open offer price of Rs 154 per share puts the enterprise value of ACL at $ 300 per tonne - the highest in the industry. The market capitalisation of ACL at the offer price would be Rs 23,408 crore.

Prameet Ghosh, managing director, DSP Merrill Lynch said the offer would open on October 18 and close on November 6. The specified date for the open offer is September 21.

The ACL stock closed at Rs 132.75 in a weak market, up 1.72%.

The non-promoters' shareholding in ACL stand at around 63%. "Going by the non-promoters shareholding, the acceptance of the offer will be around 32%," a broker said.