UltraTech ups offer price for Jaypee’s 21.2 mtpa cement units to Rs16,189 crore

Aditya Birla group company UltraTech Cement has increased the offer price for cement units of Jaiprakash Associates by Rs289 crore to Rs16,189 crore, from the earlier Rs15,900 crore.

The board of directors of UltraTech Cement Ltd at its meeting on Monday approved the acquisition of Jaypee Group's 21.2 MTPA cement plants for an enterprise value of Rs16,189 crore.

The move follows a review by the joint lenders forum on the arrangements made by Jaiprakash Associates to reduce its debt level.

This is in continuation of an agreement signed on 31 March 2016, between UltraTech Cement on the one hand and Jaiprakash Associates and Jaypee Cement Corporation - and their shareholders and creditors, Aditya Birla Group stated in a release.

Jaypee Group had announced part sale of its cement business in five states and a grinding unit in Uttar Pradesh to Ultratech for Rs15,900 crore, which is stated to be one of the biggest deals in the domestic cement industry.

UltraTech, however, had to call off its deal to buy Jaiprakash Associates' two cement assets in Madhya Pradesh for Rs5,400 crore due to a regulatory hurdle.

The company, which had put the purchase of the plant before the Bombay High Court for approval, was advised by the court to withdraw the offer since some amendments in the Mines and Minerals Development and Regulation Act prevented the transfer of mines granted through mechanisms other than through auction. (UltraTech calls off bid for Jaypee cement assets) http://www.domain-b.com/companies/companies_u/UltraTech/20160227_jaypee_cement.html

Ultratech had in April announced plans to acquire part of debt-ridden Jaypee Group's cement business for Rs15,900 crore, in one of the biggest M&A deals in the domestic cement industry. (Ultratech buys part of Jaypee Group's cement business for Rs15,900 crore) http://www.domain-b.com/companies/companies_u/UltraTech/20160401_cement.html

The deal finalised now involves cement manufacturing capacity of 17.20 MTPA in Uttar Pradesh, Madhya Pradesh, Himachal Pradesh, Uttarakhand and Andhra Pradesh and 4 MTPA capacity grinding unit that is being built in Uttar Pradesh.

UltraTech will also pay an additional Rs470 crore for completion of the grinding unit.

The consummation of transaction is expected to take 9 to 12 months.

The transaction is subject to the approval of shareholders and creditors, high courts and all other regulatory approvals as may be required and will be consummated within the next 12 months.

Upon consummation, the company's cement capacity will stand augmented to 91.1 MTPA, including its overseas operations.

The proposed transaction will lead to UltraTech's entry into growing markets in the country such as the Satna cluster [in Uttar Pradesh (East) and Madhya Pradesh (East)], Himachal Pradesh, Uttarakhand and coastal Andhra Pradesh.

The operations will be strengthened by the consequent technological upgradation and enhancement in capacity utilisation on a year-on-year basis, creating synergies in manufacturing, distribution and logistics leading to economies of scale.

The companies will also create efficiencies by reducing lead time to markets, enhancing competitiveness and thereby benefiting consumers and creating value for its shareholders by acquiring ready-to-use assets, it added.