Shareholders will get 4 shares of UltraTech for every 7 shares of Samruddhi
Samruddhi Cement, a wholly-owned subsidiary of Grasim Industries, is all set to merge with UltraTech Cement, Grasim’s other subsidiary, on July 1, 2010. The merger, to be completed by September, will result in the world’s 10th largest cement maker.
In a meeting today, UltraTech’s board approved the merger of Samruddhi with itself. Samruddhi’s shareholders will get four shares of UltraTech of Rs 10 face value for every seven shares of Samruddhi of Rs 5 face value each.
UltraTech will issue 149.5 million new shares, thereby increasing its equity capital to Rs 274.20 crore.
When the merget becomes effective, Grasim will hold a 60.3 per cent stake in UltraTech’s expanded equity and 39.7 per cent will be held directly by the other shareholders of UltraTech and Samruddhi.
On completion of the merger, Samruddhi shareholders will get direct participation in the largest domestic cement maker. The proposed merger will be subject to the approvals of the High Court of Bombay and the High Court of Gujarat.
The merged entity will have a capacity of 48.8 million tonnes per annum, with 22 plants. The captive power generation capacity will be 504 Mw and the number of readymix concrete plants will be 68, with an overall capacity of 11.7 million cubic meters.
With Samruddhi’s assets, UltraTech will add the speciality products of white cement and wallcare putty in its product mix, apart from its existing grey cement.
Kumar Mangalam Birla, chairman of the Aditya Birla Group, said: “The merger will achieve the groups’s objective of consolidating its cement business into a single entity, thereby creating a platform that will help in pursuing aggressive growth going forward.”
The cement business of Grasim is currently under a demerger process, with all its assets being shifted to Samruddhi, and the proposed merger of Samruddhi with Ultratech will take effect only upon completion of the demerger process and listing of Samruddhi.
Adesh Gupta, whole time director and CFO of Grasim, said: “Grasim will retain a strategic and controlling interest in UltraTech, while providing UltraTech flexibility for future fund raising.”
“The merger represents an inflexion point for UltraTech,” said K C Birla, CFO of UltraTech. He added that the combined profitability and cash flows of the resultant entity would provide impetus to the company’s growth.
