Kumar Mangalam Birla’s Ultratech is all set to take over the cement business from Kesoram Industries in an all-stock deal. Both companies disclosed the deal in separate announcements. Although there is not much information available about the deal right now, sources say that the deal is worth somewhere around ₹7600 crore, including a ₹1700 crore debt on Kesoram Industries.
As this is a share-based takeover, every shareholder of Kesoram Cement will get one Ultratech share for every 52 shares held by them. The cement business was a prized possession of Kumar Mangalam Birla’s grandfather, Late BK Birla. This deal also helps Kesoram clear some of its debt and increase its cash flow.
According to the deal, Ultratech will issue 59,74,301 new equity shares for the shareholders of Kesoram Industries. This will also increase Ultratech’s equity capital to ₹246 crore. Ultratech is also one of the fastest-growing companies in India in terms of dividend payout. As per the deal, Ultratech will also get 2 cement manufacturing plants from Kesoram Industries. The plants are located in Sedam, Karnataka, and Basantnagar Telangana, with a total cement manufacturing capacity of 10.75 Mtpa ( Million tonnes per annum).
In a statement, a spokesperson of Ultratech said, ‘The transaction will provide UltraTech the opportunity to extend its footprint in the highly fragmented, competitive and fast-growing Western and Southern markets in the country.’ The deal is subjected to regulatory approvals and is expected to be consummated within the next 9-12 months.
