ACC Ltd and Ambuja Cements -- the two Indian units of the world's largest cement producer LafargeHolcim -- today decided to explore merger between them, ending months of speculation.
The boards of the two companies, at their separate meetings, decided to commence an evaluation of a potential merger.
The step has been taken with view to combining the strengths of both businesses so as to benefit all stakeholders, the two companies said in separate statements.
Both the companies have constituted a special committee of directors, of which majority are independent directors, to commence evaluation of the merger.
Stating that no decision for a merger has been taken, the companies said their respective boards would decide on the move based on the recommendation of the special and the audit committees.
If the proposed merger goes through, the combined entity will have a turnover of over Rs 20,425 crore based on their respective revenues in 2016.
Mumbai-based ACC, which follows January-December financial year had a revenue of Rs 11,158.34 crore in 2016.
Gujarat-based Ambuja cement, which also follows January- December financial year, had reported a revenue of Rs 9,267.82 crore in 2016.
The combined entity would have production capacity of 63 million tonnes per annum (MTPA) and become the second largest cement producer in India behind Ultratech Cement, which has an installed capacity of 69.3 MTPA.
Currently, Ambuja Cement has capacity of 29.65 MTPA with five integrated plants and eight cement grinding units across the country.
ACC, on the other hand, has a total of 33.41 MTPA with 17 cement factories.
Both ACC and Ambuja Cements became parts the Holcim group in 2005. Following the merger of Holcim Limited with Lafarge SA in 2015, a new entity LafargeHolcim was created to become the world's largest cement producer.
Following the merger of the global majors, there has been periodic speculations that ACC and Ambuja Cement would become a single entity.
In February, stocks of the two companies had gained after reports of a possible merger between them
Share of ACC Ltd closed today at Rs 1,655.30, up 1.94 per cent on BSE. Ambuja Cements settled 0.86 per cent up at Rs 246.30.
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