UltraTech, which is India’s leading industrial and construction firm, has decided to make a massive deal with Kesoram Industries cement firm, acquiring the entire stake of the company in a buyout worth USD 645 million.

UltraTech has made a deal worth 5.4k crore with Kesoram Industries cement business.(Reuters)

Aditya Birla’s flagship cement manufacturer UltraTech Cement Ltd said on Thursday that the company has struck an all-stock deal valued at 5378 crore with the cement business owned by Kesoram Industries, in an an attempt to push the business forward in southern India.

As a part of the deal, UltraTech will issue one share for every 52 shares of Kesoram and give UltraTech ownership of two integrated cement units in southern Indian states of Karnataka and Telangana. The deal implies an offer price of 173.15 rupees per share, a 24.2% premium to Kesoram’s last close.

The Indian cement sector has emerged as one of the most competitive industrial fields, and with this massive deal, UltraTech is looking to rise higher than Gautam Adani-owned Ambuja Cements, which recently purchased majority stake in the firm Sanghi Cement.

As quoted by Reuters, Satyadeep Jain, research analyst at Ambit Capital, said, “UltraTech already has one of the best brownfield potential in industry. This deal, if it does go through, would be additive to that and help cement its capacity lead over others, even as other players with larger ambitions ramp up.”

In an official statement while announcing the buyout, UltraTech said that the transaction attached to the deal will be finalised in 9-12 months, and the deal has been made to take over “players with larger ambition.”

The firm said, “The transaction, expected to be completed within 9-12 months, will provide the company “the opportunity to extend its footprint in the highly fragmented, competitive and fast growing Western and Southern markets in the country.”

UltraTech is currently on a path to achieve its previously stated goal of 200 million tons per annum (mtpa) cement capacity in India. Meanwhile, the buyout of the cement firm will leave Kesoram Industries with their rayon, chemicals and transparent paper business.

With inputs from Reuters

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