Ambuja Cements-ACC-Orient Cement merger: What it means for shareholders?

Ambuja Cement-ACC-Orient Cement merger: What it means for shareholders?

ACC and Orient Cement on December 22 announced that their respective boards have approved their merger with Ambuja Cements. The companies have announced the share swap ratio for the two proposed mergers.

The merger schemes are subject to necessary statutory and regulatory approvals under the applicable laws, including approval of the jurisdictional National Company Law Tribunal (NCLT), the companies said in the post market hours of Monday.

Merger to create Pan-India Cement Powerhouse:

In a press release, Ambuja Cements said that the merger will create a ‘Pan-India Cement Powerhouse’ and will deliver operational synergistic benefits by optimising manufacturing and logistics networks, streamlining corporate structure, strengthening balance sheet and facilitating efficient capital allocation to support growth and bolster market leadership.

"The merger will simplify and rationalise the network, branding and sales promotion related spends. This will help to optimise costs and improve margin by at least Rs. 100 PMT. Merger will facilitate achieving targeted cost, margin expansion and growth metrics," the Adani Group company said.

Ambuja Cements-ACC merger details:

Ambuja Cements said that after the merger, the eligible shareholders of ACC will receive 328 shares of Ambuja Cements with a face value of Rs 2 each for every 100 ACC shares they own with a face value of Rs 10 each. Hence, the share swap ratio for Ambuja Cements-ACC merger stands at 328:100.

This means that an eligible shareholder of ACC holding 100 shares of the company, worth Rs 17,825 at the previous closing price of Rs 1,782.50 apiece, will get 328 shares of Ambuja Cements worth Rs 17,7104 at the previous closing price of Rs 539.95 apiece.

Notably, the record date for the merger scheme is yet to be announced. The record date will be crucial to determine the eligibility of the shareholders set to participate in the scheme.

Ambuja Cements-Orient Cement share swap ratio:

Ambuja Cements said that after the merger, the eligible shareholders of Orient Cement will receive 33 shares of Ambuja Cements with a face value of Rs 2 each for every 100 Orient Cement shares they own with a face value of Rs 1 each. Hence, the share swap ratio for Ambuja Cements-Orient Cement merger stands at 33:100.

This means that an eligible shareholder of Orient Cement holding 100 shares of the company, worth Rs 16,352 at the previous closing price of Rs 163.52 apiece, will get 33 shares of Ambuja Cements worth Rs 17,818.35 at the previous closing price of Rs 539.95 apiece.

The record date for this merger too is yet to be announced.

"The consideration for the Scheme will be discharged on an ‘arm’s length’ basis," the company said, adding that the Adani Ambuja Cements and Adani ACC brands will continue to operate as usual, depending on the leading product brands in their respective segments after the mergers.

Ambuja expects the mergers to be completed over a period of twelve months, subject to requisite approvals such as shareholders, creditors, SEBI, NCLT and more.

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