LafargeHolcim ends talks with Birla Corp, weighs revised divestment plan
04 Feb 2016
LafargeHolcim has ended its discussion with Birla Corporation Ltd (BCL) for the sale of the Jojobera and Sonadih cement plants in Eastern India that was announced earlier and is considering a revised divestment plan for its stake in Lafarge India.
The group's plan to transfer an annual cement capacity of around 11 million tonnes in eastern India to Birla Corp fell through because of problems associated with mining rights.
"LafargeHolcim today announced that it is considering a divestment of its interest in Lafarge India with an annual cement capacity of around 11 million tonnes," Birla Corp said.
Lafarge, however, needs to divest the capacity in Eastern India for the Competition Commission of India (CCI) to approve the divestment as an alternate remedy for the merger of the group's legacy companies.
LafargeHolcim is no longer in discussion with Birla Corporation Limited (BCL) for the sale of the Jojobera and Sonadih cement plants in Eastern India that was announced earlier.
The BCL proposal involved the divestment of 5.1 million tonnes capacity by Lafarge India. Both BCL as buyer and the sale agreement with BCL were subject to approval by the CCI along with other regulatory approvals and customary conditions. ''Due to the current regulatory issues relating to the transfer of mining rights captive and critical to the two plants, LafargeHolcim was obliged to submit an alternate remedy to the CCI to ensure compliance with the order,'' LafargeHolcim stated in a release.
The alternate remedy is now under consideration by the CCI. The group remains in dialogue with the CCI and will communicate any further updates to the divestment process in India in due time, the release added.
The deal to acquire the two plants would have taken Birla Corp's cement production capacity to over 15 million tonnes per annum, with a strong presence in the eastern part of India, up from about 10 million tonnes now.
Birla Corporation Ltd, whose business interest include jute and cement, plans to take legal action against the Indian unit of LafargeHolcim after a pact to buy some of the assets of the Swiss-French cement giant fell through.
"The company has since discussed the matter with its legal advisors and has decided not to accept their contention and is in the process of taking appropriate legal measures in consultation with lawyers," it said.
The deal to acquire the two plants would have taken Birla Corp's cement production capacity to over 15 million tonnes per annum, with a strong presence in the eastern part of India, up from about 10 million tonnes now.