Guj Ambuja Drops Bid For Dlf Cement

Cement major Gujarat Ambuja's bid to acquire DLF Cement of the Delhi-based DLF group has come a cropper, following sharp differences between the two sides over pricing.

``DLF's asking price was way above what Gujarat Ambuja was willing to pay,'' financial insitutional sources said. Ambuja had sounded FIs on whether they would waive interest on loans accumulated by DLF after the takeover.

A top executive of Ambuja said there was no move to acquire DLF Cement "Gujarat Ambuja is not interested in the company,'' said Ambuja treasurer, Anil Singhvi.

Attempts to contact DLF executives in Delhi was futile.

Gujarat Ambuja was talking to DLF for buying out the company and had even visited its plant in Rajasthan. Later it sought Fis views on whether they would waive interest on DLF loans. The Fis had waived the interest on loans of Modi Cement after Ambuja bought from the K K Modi group last year.

 

Top investment banking sources in Mumbai said the deal could not go through as a price of Rs 20 per share of Rs 185 crore was too high for Ambuja. "No way Ambuja is going to pay that much money. They can buy other companies more cheaply," sources explained. DLF has debts of Rs 380 crore. Thus, if Ambuja were to pay that price and take on all liabilities, the total value of the transaction including debts would have been more than Rs 500 crore.

DLF has been looking for buyers for quite some time now and had approached several companies. The plant was set up in 1993 at a cost of Rs 397 crore and has technology from Nihon Cement of Japan. Its total capacity is 1.4 million tonnes and is located on the Delhi-Jaipur highway.

For DLF, the failure of the talks means a fresh hunt for other buyers. Ambuja which was planning to expand its presence in northern and western India through this will have to keep searching for other opportunities.

The takeover rereports had sparked a controversy with the Delhi Stock Exchange (DSE) directing both companies to clarify their stand separately. The exchange authorities had noted that the volumes as well prices of the two scrips have fluctuated in the wake of the outbreak of the report on May 19. Both the companies had filed their replies, but the DSE authorities were not satisfied with the reply submitted by DLF Cements. Consequently, the company was to respond in a pointed manner. The DLF reply focused mainly on another news item that appeared in a financial daily on May 20, saying that Gujarat Ambuja had rejected the takeover offer.