UltraTech Cement advances toward major stake acquisition in India Cements
UltraTech Cement, a part of the Aditya Birla Group, is reportedly in advanced talks to acquire a 28.42% share in India Cements, from its Vice Chairman and Managing Director, N. Srinivasan. This acquisition will increase UltraTech's shareholding in the South India-based firm to 51%, according to The Economic Times. A team of senior officials from UltraTech is currently conducting due diligence, with an official announcement expected soon.
Open offer and acquisition costs
The transaction may trigger an open offer by UltraTech to purchase additional stakes at around ₹400-430 per stock, a premium of about 8-15% over the current market price. The cement giant would spend approximately ₹7,000 crore to acquire Srinivasan's stake, and fund the mandatory open offer. The actual cash outlay is expected to depend on the level of participation from current minority shareholders in the open offer.
Deal discussions and succession planning at India Cements
The proposed deal has been under discussion since June, when UltraTech acquired Radhakrishna Damani's stake in India Cements. A source told The Economic Times that "the strategy for India Cements has been in progress for a while. The comfort level between India Cements and UltraTech, coupled with succession planning for N. Srinivasan, made this buyout logical." Srinivasan, who will turn 80 in January 2025, has been leading India Cements since 1989 after his father T.S. Narayanaswami's death.
Srinivasan family's future involvement
Reports suggest that N. Srinivasan's daughter, Rupa Gurunath, a whole-time director, and his wife, Chitra Srinivasan, a board director, have no interest in running the business, after Srinivasan steps down over health issues. This information comes as UltraTech Cement continues its acquisition talks with India Cements. The final decision on the stake sale is yet to be announced by either of the companies involved.
