New Delhi, April 1: In one of the biggest deals in the domestic cement industry, debt-ridden Jaypee Group Thursday announced part sale of its cement business to Kumarmangalam Birla-led Ultratech for Rs 15,900 crore.
The transaction will see Ultratech become possibly the biggest cement player in the country after gaining an overall capacity of 21.2 million tonne per annum from Jaypee’s cement plants in five states and a grinding unit in Uttar Pradesh.
Post this deal, the capacity of Ultratech will rise to 91.1 MTPA, including its overseas operations, while that of JAL will come down to 10.6 MTPA spread over Madhya Pradesh, Uttar Pradesh, Andhra Pradesh and Karnataka.
The value of the transaction, however, has been reduced from Rs 16,500 crore announced last month as Jaiprakash Associates Ltd’s (JAL) Karnataka plant with a capacity of 1.2 million tonnes per annum (MTPA) has been excluded.
Announcing the deal, JAL in a filing to the BSE said its board today approved the definitive agreement with Ultratech Cement (UTCL) for sale of part of its cement business.
It includes “cement plants with an aggregate capacity of 17.2 MTPA spread over the states of Uttar Pradesh, Madhya Pradesh, Himachal Pradesh, Uttarakhand and Andhra Pradesh, besides a grinding unit of 4 MTPA capacity, which is currently under implementation in UP.”
Both the parties have mutually agreed to exclude Shahabad plant in Karnataka from the transaction, it added.
“The total enterprise value is Rs 15,900 crore and additional amount of Rs 470 crore shall be paid by UTCL for completion of the grinding unit under implementation,” it said.
The transaction is subject to various regulatory approvals including approval of stock exchanges, Competition Commission of India, shareholders and creditors as well as sanction of scheme of arrangement by High Courts at Mumbai and Allahabad.
“The consummation of transaction is expected to take 9-12 months,” JAL said in the filing.
