Holcim-Ambuja deal: Brokerages analyse who is a winner

Holcim reorganises ownership of Ambuja Cements and ACC. Ambuja will now become 50 percent owner of ACC for Rs 14,500 crore in a cash and stock deal. As a result, Holcim's stake in Ambuja will increase to 61 percent and ACC will become a subsidiary of Ambuja. As a result, Holcim's stake in Ambuja will increase to 61percent and ACC will become a subsidiary of Ambuja.

So, how brokerages rate the deal?

Standard Chartered
Gain For Holcim, hit to Ambuja
Likely per share loss for Ambuja Cements minority shareholders
Likely loss due to holding company discount in ACC

Bank of America Merill Lynch
Downgrade to Neutral; Holcim deal adds to minority-worries
Cut rating on Ambuja to neutral despite expected industry-wide earnings improvement in CY14E
Revised target price stands at Rs 195 per share
Deal does not help EPS, but lifts Holcim stake in Ambuja

JP Morgan
Ambuja Cements Limited Underweight
Negatives:
Cash goes out
Equity base expands
Becomes a holding company

Morgan Stanley
Expect the stocks to react negatively
Ambuja Cements being worse off

Religare
ACC stake acquisition a negative; downgrades to Sell
Target price reduced to Rs 175 (from Rs 195).
Ambuja Cements minority shareholders would be at a disadvantage by acquiring a less-efficient company.

CLSA
Downgrade to sell
Target price at Rs 175 per share

Kotak Institutional Equities
Downgraded Ambuja to sell from reduce
Revised target to Rs 155 per share
Parent Holcim biggest beneficiary of deal
Both companies had outlined capex plans for 2-3 years

nasrin.sultana@network18online.com