UltraTech to buy Kesoram's cement unit
UltraTech will acquire the cement business of the BK Birla Group's Kesoram Industries in an all-stock deal at an estimated enterprise value of around ₹7,600 crore, which includes debt.
The deal will give UltraTech access to two integrated cement manufacturing units in Karnataka and Telangana with a combined capacity of 10.75 million tonnes per annum (MTPA).
«The transaction will provide UltraTech with the opportunity to extend its footprint in the highly fragmented, competitive and fast-growing western and southern markets in the country,» UltraTech said in a press statement. The company will also get better access to markets in south India, especially Telangana, where it currently does not have any cement manufacturing capacity.
The country's largest cement maker will issue one share for every 52 of Kesoram Industries, as per a regulatory filing on Thursday evening.
5.97 million new shares to be issued
That will result in the issuance of 5.97 million new equity shares of UltraTech to the shareholders of Kesoram.
It will mean 2.2% dilution of the equity capital of UltraTech valued at around Rs 5,400 crore.
UltraTech will also assume the outstanding debt of Kesoram's cement business, said people in the know, taking the enterprise value of the deal to around Rs 7,600 crore.
The swap ratio translates to a value of Rs 173 per share for Kesoram and pegs the deal at $83 per metric tonne, according to Centrum Broking analysts. That translates to a premium of 24% over the closing price of Rs 139.11 for Kesoram shares on Thursday.
