According to a filing with the exchanges on Thursday, UltraTech Cement Ltd., the parent company of the Aditya Birla group, has purchased Kesoram Industries’ cement division in exchange for shares. A share of UltraTech will be issued for every 52 shares of Kesoram, meaning that the offer price per share would be ₹173.15, which is 34% more than the most recent closing price of Kesoram.
With the debt the business will assume from Kesoram included, the deal is estimated to be worth ₹7,600 crore.
To increase capacity to 160 million tonnes (mt), UltraTech had announced a third round of capital expenditures in October 2023 totaling ₹13,000 crore. With Kesoram’s business, the company will be able to reach its 200 mt goal. On the record date specified in the scheme, Kesoram shareholders will receive 5,974,301 new equity shares of the company in connection with this transaction. According to UltraTech, this will raise the company’s equity capital to 294.66 crore, or 294.7 million equity shares at a value of 10 each.
With its international operations included, the company’s yearly cement capacity will reach 149.14 mt following the acquisition. The proposed deal would quicken India’s progress towards reaching its declared target of 200 million tonnes annually (mtpa).
It expects to extend its footprint in the highly fragmented, competitive, and fast-growing western and southern markets in the country following the deal. It will aid in expanding the company’s market share in southern regions like Telangana, where it presently lacks a cement manufacturing facility. The company further stated that economies of scale from synergies in procurement, logistics, and fixed costs will support the operations.
