Shares of UltraTech Cement and Jaiprakash Associates rose 1.28% to 2.61% at 9:51 IST on BSE after the board of UltraTech Cement approved a proposal for the acquisition of two cement units of Jaiprakash Associates located in Madhya Pradesh.
The announcement was made after market hours yesterday, 23 December 2014.
UltraTech Cement (up 2.61% at Rs 2,606) and Jaiprakash Associates (up 1.28% at Rs 23.75) edged higher.
Meanwhile, the S&P BSE Sensex was down 6.97 points or 0.03% at 27,499.49.
UltraTech Cement's board of directors at its meeting held yesterday, 23 December 2014, approved acquisition of two cement units of Jaiprakash Associates in Madhya Pradesh viz. integrated cement plant with clinker capacity of 2.1 MTPA and cement grinding capacity of 2.6 MTPA at Bela, Madhya Pradesh (MP), integrated cement plant with clinker capacity of 3.1 MTPA and cement grinding capacity of 2.3 MTPA at Sidhi, MP, and 180 MW TPP of which 25 MW is situated at Bela and 155 MW at Sidhi.
UltraTech board has approved the memorandum of understanding setting out the broad terms and conditions of the proposed acquisition. The enterprise value of this acquisition has been agreed at Rs 5400 crore, UltraTech Cement said in a statement.
The transaction is subject to customary due diligence, definitive agreements, and regulatory approvals as may be required.
UltraTech Cement said that this acquisition will create significant synergies and the surplus clinker will enable UltraTech to augment its cement capacity by a further 1.8 - 2.5 MTPA in addition to the 4.9 MTPA. This acquisition will enable the company to increase its presence in Satna cluster of MP, UltraTech Cement said.
With this acquisition, the company's cement capacity in India will increase from about 60 MTPA to 65 MTPA and with projects underway, the capacity will stand raised to about 71 MTPA by 2016, UltraTech Cement said in a statement.
UltraTech Cement's consolidated net profit rose 48% to Rs 414.24 crore on 18% growth in net sales to Rs 5723.30 crore in Q2 September 2014 over Q2 September 2013.
UltraTech Cement, part of the Aditya Birla Group, is a leading cement manufacturer in India.
Jaiprakash Associates reported a net loss of Rs 106.48 crore in Q2 September 2014 compared with net profit of Rs 67.67 crore in Q2 September 2013. Net sales declined 15.4% to Rs 2664.12 crore in Q2 September 2014 over Q2 September 2013.
Jaiprakash Associates is a diversified infrastructure conglomerate with business interests in engineering & construction, cement, power, real estate, expressways, fertilizer, hospitality, healthcare, sports, information technology and education (not-for-profit).
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