Aditya Birla Group’s flagship company UltraTech Cement, the biggest cement manufacturer in the country, is in advanced talks with German cement major Heidelberg to acquire its Indian listed business, HeidelbergCement India Ltd, people familiar with the matter have told Moneycontrol.
Top Aditya Birla group executives recently met the German cement maker’s global management to discuss the acquisition of HeidelbergCement India, the sources said.
Heidelberg owns a 69.39 percent stake in the company, which is listed on the Indian stock exchanges. The stake was worth around Rs 3,381 crore at the stock’s closing price on January 24.
Moneycontrol reported on October 7 that Heidelberg had drawn interest from major Indian cement makers such as Adani group and JSW Cement as well as UltraTech. The Economic Times also reported on October 7 that Adani group had begun talks with Heidelberg for the acquisition of its India assets.
A controlling stake sale will trigger a mandatory open offer under SEBI’s takeover norms, for acquiring a 26 percent stake from public shareholders.
In response to Moneycontrol's query, HeidelbergCement said in an email that it does not respond to or comment on "market rumours". Emails sent to UltraTech did not elicit a response.
UltraTech’s plans to acquire a controlling stake in Heidelberg comes as the country’s biggest cement maker steps up focus on inorganic growth amid consolidation in the cement industry triggered by Adani group’s $6.6-billion acquisition of Ambuja Cements and ACC Limited in 2022 from Lafarge-Holcim.
Adani’s aggressive growth strategy has prompted other companies to chase smaller cement makers, as they look to protect their turf and expand into newer markets.
On the other hand, the increased competition in the Indian cement market is forcing mid-sized players into consolidation. The increased competition and new manufacturing capacity addition outpacing demand, are expected to also adversely affect margins of smaller cement players as larger players have better cost efficiencies and profitability due to economies of scale.
In 2024, UltraTech acquired a 55.49 percent stake in Chennai-based India Cements. It picked up a 22.7 percent stake in India Cements in June. On July 28, UltraTech Cement announced it would purchase another 32.72 percent stake for Rs 3,954 crore at Rs 390 a share.
Earlier this month, the company launched an open offer to acquire an additional 26 percent stake from public shareholders.
On December 27, UltraTech announced the acquisition of an 8.69 percent stake in Star Cement for Rs 851 crore.
Also Read: UltraTech Cement Q3: Firm reports decline in profit YoY but demand hike springs surprise
JSW Cements, which in August 2024 filed draft papers for its public offer, said over the past five years, the sector has witnessed an unparalleled surge in mergers and acquisitions, resulting in the transfer of 106-108 1 million tonnes per annum (mtpa) of capacity, of which, 95-97 mtpa has been acquired by large players. Large players installed only 51-53 mtpa of capacity through the organic route.
HeidelbergCement India biz
Heidelberg Materials Group entered the Indian market in early 2006 by acquiring a controlling stake in Mysore Cements and initially formed a joint venture with Indorama Cement, which evolved into a full acquisition by 2008.
Following the merger of Indorama Cement with Mysore Cements in 2009, the company was rebranded HeidelbergCement India Ltd.
In the same year, the company embarked on a brownfield capacity expansion in Central India, boosting its cement manufacturing capacity from 2.1 mtpa to 5.4 mtpa.
With four integrated cement plants and equal number of grinding units and a terminal, Heidelberg group’s installed capacity in India is about 14 mtpa.
For FY24, HeidelbergCement recorded a revenue of Rs 2,420.3 crore, up 6 percent from the previous fiscal.
Net profit stood at Rs 167.7 crore, up 69 percent over from the previous fiscal.
At 11.15 am, the HeidelbergCement stock was trading at Rs 210.27 on the National Stock Exchange, down 2.18 percent from the previous close.
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