JSW in initial talks to cement deal with Germany’s Heidelberg Materials for its India business
JSW Cement, the building-materials business of steelmaker JSW Group, is in initial talks with Germany's Heidelberg Materials to acquire the latter's 13.4 million-tonne-a-year cement businesses in India, industry sources aware of the talks told ET.
The people cited above said the discussions, currently bilateral, began after the JSW Group made an unsolicited offer to acquire Heidelberg's local entities that primarily have capacities in peninsular India. The world's second-biggest cement market, both by capacity and consumption, India has a highly regional and freight-intensive building-materials industry where manufacturing proximity to the end consumption market often determines profitability-linked enterprise valuation multiples in mergers and acquisitions.
To be sure, Heidelberg is yet to take a final call on its India exit strategy and according to the people cited above, it is possible that it may eventually decide to opt for a bidding process for the assets to allow other potential buyers to participate and increase competitive intensity for the plants.
A Heidelberg Materials spokesperson declined to comment, while the JSW Group did not respond to ET's email seeking comments.
Holcim Exit
If concluded, it will mark the exit of a second global cement manufacturer from India after Swiss building materials company Holcim Group exited India in 2022, selling Ambuja Cements and ACC to the Adani Group in a closely contested bidding in which JSW Group had also participated.
Heidelberg has more than 13 million tonnes per annum (MTPA) cement making capacity in India, of which 6.3 MTPA is with the listed entity HeidelbergCement India, and 7.1 MTPA is with the closely held Zuari Cement.
