Aditya Birla Group Company UltraTech Cement has announced to buy the cement business of Century Textiles and Industries through a share swap deal that will make the company third largest player globally (Excluding China) crossing the 100-million-tonne capacity.
The deal is proposed to involve an enterprise value of Rs 8,621 crore that includes a debt of Rs 3,000 crore. As per the latest Board Meeting of the company, an approval has been sought for a scheme of arrangement amongst Century Textiles and Industries and its respective shareholders and creditors and will likely complete before the end of this year.
As a part of the deal, Century Textiles will first separate the cement division and then the demerged company will be combined with UltraTech. Shareholders of UltraTech will get eight shares of the demerged Century Textiles for every one share held.
It is interesting to note the news for acquisition has come in when Ultratech is already pushing to takeover battle with Binani Cement which has a capacity of 10 million tonnes.
UltraTech MD K Maheshwari said, We don’t see any hurdle in getting approval from the Competition Commission of India (CCI) for the transaction. In any case, UltraTech will own less than 25% of the total cement capacity of 450 million tonnes in the country after the completion of the deal.
Century Textiles is selling the cement business to focus on the real estate, textiles and pulp & paper businesses. The Company’s textile mill – popularly known as ‘Century Mill‘ – was one of the largest composite mills in one compound in the whole of India.
Talking of actual numbers the amalgamation of Century Textiles and UltraTech would result in a firm with a turnover and an operating profit of Rs 34,306 crore and Rs 7,192 crore respectively.
If everything falls into place, this acquisition will undoubtedly make Kumar Mangalam the undisputed king of the Indian cement industry. On the other hand, the transaction would provide UltraTech with an opportunity to further strengthen its presence in the east and central markets while extending its outreach in southern and western markets.