Sebi yet to clear Holcim offer for Ambuja Eastern

The Securities and Exchange Board of India (Sebi) has not yet given its nod to Holcim's open offer to the minority stakeholders of Ambuja Cement Eastern even as Holcim's open offer for acquiring up to 50.1 per cent stake of the Associated Cement Companies (ACC) was cleared last week after a fortnight's delay.

The open offer for ACC is now scheduled to begin on March 23 and close on April 11, instead of the original date of March 9.

The Life Insurance Corporation of India (LIC), which currently holds a 15.7 per cent stake in ACC is set to offload 5.7 per cent of its holding through this open offer.

Holcim, along with Gujarat Ambuja Cement, has made an open offer for the balance 6 per cent of ACEL's stake at Rs 70 per share. The offer was made through, an investment arm Ambuja Cement India Ltd (ACIL), which currently holds 94 per cent stake in ACEL.

Holcim's open offer for ACC was held up by a fortnight due to a delay in Sebi's approval. Holcim has made this offer at Rs 370 per share, in consortium with Gujarat Ambuja Cement through ACIL.

According to the arrangement between Holcim and Gujarat Ambuja, the former will acquire a 67 per cent stake in ACIL. ACIl currently holds a 13.8 per cent stake in ACC.

LIC intends to hold on to a significant portion of its holding in the Indian cement company, as it sees value in the stock and feels this is not the time to exit from the cement sector.

It would only be selling one-third of its stock to the cement major. "We will retain 10 per cent stake in ACC," said LIC chairman R N Bhardwaj.

Over 50 per cent of LIC's stake in ACC, amounting to 1.62 crore shares or 9.5 per cent of the stock, had been acquired from an auction of shares belonging to deceased stock broker Harshad Mehta in 2003.

As these shares were acquired at a price of Rs 170 in the block deal, LIC wants to book profit partially even as it intends to retain two-thirds of its current holding.

Financial institutions collectively hold 18.63 per cent stake in ACC. But most FIs do not find the open offer price attractive as they anticipate immense value in cement stocks.

Foreign insititutional investors, which hold a higher stake of 23.27 in ACC, would now play a crucial role in the success of the open offer.