ACC and Ambuja Cements are exploring the possibilities of a merger and the boards of the two companies on Friday decided to constitute a special committee of directors with a majority of independent directors to consider the matter further. In separate statements, both companies said that a merger could enable them to combine their strengths of business so as to benefit all the stakeholders.
ACC and Ambuja Cements are part of LafargeHolcim and a merger between the two has been on the cards since 2013. Any such move would bring about synergies between the two if they decide to have a common brand name. A merger can also bring in more pricing discipline in the industry.
The domestic cement industry has been witnessing a spate of mergers and acquisitions over the last few years which has seen the Jaypee Group selling its cement assets to a larger player, UltraTech Cement.
Ambuja Cements holds a 50.05% stake in ACC, while Lafarge holds 4.48% through Holderind Investments. On the other hand, LafargeHolcim holds 63.62% stake in Ambuja Cements through Holderind Investments.
ACC became a subsidiary of Ambuja after the merger of the latter with Holcim (India) (HIPL) in August 2016.
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The proposed merger would boost the overall revenue of the combined entity. ACC, which follows a January-December financial year, had net sales of `11,168 crore in 2016.
Ambuja Cements, which also follows a January-December financial year, had reported net sales of Rs 20,344 crore crore in the same year.
Both ACC and Ambuja Cements became part of Holcim group in 2005. Following the merger of Holcim with Lafarge in 2015, a new entity LafargeHolcim was created that became the world’s largest cement producer.
ACC has about 7,800 employees and runs 17 cement manufacturing sites, and 50 concrete plants in the country. Ambuja Cements has a cement capacity of 29.65 million tonnes with five integrated cement manufacturing plants and eight cement grinding units across the country.