Holcim to invest in ACC

Mumbai: Swiss global giant, cement producer Holcim, yesterday said it was investing $800 million (approximately Rs 3,520 crore) in a deal which gives it control over the Associated Cement Companies (ACC).

Holcim will own two-thirds of an investment company, which will eventually have 50.01 per cent stake in ACC. The balance one-third holding in the investment company will be with Gujarat Ambuja Cements Ltd (GACL).

The Holcim-GACL combine will make an open offer to the shareholders of ACC at Rs 370 per share.

Holcim will first buy out the 40 per cent stake held by private equity investors — AIG and the government of Singapore — in Ambuja Cement India Ltd (ACIL) for approximately $200 million (about Rs 880 crore). GACL holds the balance 60 per cent in ACIL, which is the holding company for GACL's 13.8 per cent stake in ACC.

Next, Holcim will pump in $600 million towards subscription to fresh equity and preference shares of ACIL, taking its stake in the investment company to 67 per cent. With the money in the balance sheet, ACIL will then make an open offer at Rs 370 per share to raise its stake in ACC from 13.8 per cent to 50.01 per cent.

In a parallel move, ACIL will also make an open offer to buy out the 6 per cent minority shareholding in Ambuja Cements Eastern Ltd at Rs 70 per share. The deal is expected to be closed by April 2005. Kotak Investment Banking was the advisor to ACIL, while DSP Merrill Lynch advised Holcim.