Competition Commission clears over Rs 7,000 cr UltraTech-India Cements deal

The Competition Commission of India (CCI) on Friday cleared over Rs 7,000-crore deal, wherein billionaire Kumar Mangalam Birla-promoted UltraTech Cement will acquire a majority stake in India Cements Ltd.

 

The key approval comes less than two weeks after the regulator had issued a show cause notice to UltraTech seeking clarification on the proposed deal, that will help consolidate its market lead amid rising competition posed by Adani group, which is scaling up capacity with acquisitions.

 

"The proposed combination envisages UltraTech Cement Ltd's (UltraTech/acquirer) acquisition of 32.72 per cent of the paid-up equity share capital of India Cements Ltd (India Cements/target) from the promoters and members of the promoter group of India Cements and Sri Saradha Logistics Pvt Ltd," CCI said in a release.

 

The fair trade regulator also granted its clearance to UltraTech Cement to acquire up to 26 per cent of the paid-up equity share capital of India Cements by way of an open offer, it added.

 

On July 28, UltraTech Cement had announced the acquisition of a 32.72 per cent stake in India Cements Ltd (ICL) from promoters and their associates in a Rs 3,954-crore deal, which will expand its footprint in the highly competitive and fast-growing southern cement market.

 

Besides, Ultratech has also announced a Rs 3,142.35 crore open offer to acquire 26 per cent share of ICL from its shareholders.

 

The Aditya Birla flagship group firm in a regulatory filing said: "CCI has by its letter dated 20th December, 2024 unconditionally approved the Primary Acquisition and the Open Offer under Section 31(1) of the Competition Act, 2002."

 

UltraTech is engaged in the manufacturing and sales of grey cement, white cement, ready-mix concrete, clinker, and building products in India.

 

The Indian cement industry is witnessing a consolidation and heightened rivalry between two corporate houses -- Kumar Mangalam Birla-led Aditya Birla Group and Gautam Adani-led Adani Group -- snapping smaller players.

 

The Adani group has plans in the works to raise its production capacity to 140 MTPA by FY28, just a shade below market leader UltraTech's current capacity of 156.66 MTPA of grey cement.

 

Adani Cement recently announced the acquisition of CK Birla group firm Orient Cement, through which it will achieve a capacity of 100 MT (million Tones) per annum by the end of FY25 and a gain of 2 per cent in the overall market share in the country.

 

It has completed the acquisition of Saurashtra-based Sanghi Industries, Penna Industries and recently announced the acquisition of CK Birla group firm Orient Cement as part of its inorganic growth strategy.

 

Aditya Birla group also plans to maintain its lead with 200 MTPA capacity by FY27. UltraTech is also in the process of acquiring Kesoram Industries' cement business and is awaiting regulatory clearances.

 

According to J Sagar Associates, Advocates & Solicitors (JSA), this proposed acquisition is an endeavour to extend UltraTech's footprint and presence in the highly fragmented, competitive and fast-growing southern market in the country, particularly Tamil Nadu, where it has a limited presence.

 

JSA acted as the sole counsel for UltraTech.

 

"This is the first instance of the CCI unconditionally approving a transaction post-issuance of a show cause notice under the amended merger control regime.

 

 

 

"It was the first long-form (Form II) merger notification filed under the new merger control regime, which came into force on September 10, 2024, with the CCI approval taking 25 days," JSA said in a statement.

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