Swiss cement giant Holcim restructures Indian operations

Switzerland's Holcim, the world's fourth-largest cement maker, yesterday said that it will streamline the ownership structure of its operations in India, where it will own a majority stake in Ambuja Cements ACC Ltd will be majority owned by Ambuja.

Through several intragroup transactions, the Zurich-based company will increase its shareholding in Ambuja to 61.39 per cent and Ambuja in turn will acquire Holcim's 50.01 per cent stake in.

Both Ambuja and ACC will continue to operate as separate entities with their own brands and go-to-market strategies. However, Holcim said that the restructuring will allow for closer back-end cooperation between the companies as well as simplify the group structure.

The board of Ambuja and Holcim have agreed that the transaction will be carried out through a merger of Holcim India Private Ltd (HIPL), a wholly owned financial holding subsidiary, with Ambuja.

HIPL currently directly holds a 9.76 per cent stake in Ambuja and a 50.01 per cent stake in ACC.

In a two stage deal, Ambuja will first buy 24 per cent stake in HIPL for Rs3,500 crore ($600 million) in cash, followed by a stock merger between HIPL and Ambuja. As part of the merger, Holcim will receive 584 million new equity shares of Ambuja resulting in an increase of its ownership in Ambuja from the current 50.55 per cent to 61.39 per cent.

''This transaction further improves Holcim's holding structure in India, strengthens the platform for future growth and is expected to generate synergy benefits of Rs 900 crore annually. These benefits, which will be realized in a phased manner over two years, will be shared by both companies equally through supply chain, shared services and fixed costs optimization,'' said,  Bernard Fontana, CEO of Holcim.