Kumarmangalam Birla-led Aditya Birla Group's flagship UltraTech Cement is at an advanced stage of negotiation with Jaypee Cement Corporation to acquire its 51 per cent stake in the 5 mtpa Gujarat facility for about Rs 4,000 crore.
"Talks are on at advanced stages and the deal is likely to happen in next 10-15 days. Ultratech will buy Jaypee Cement Corporation's 51 per cent stake in Gujarat plant, which has an annual capacity of five million tonnes" a source said.
"The deal is likely to be valued at around Rs 4,000 crore," he said. Both the firms involved in the negotiation, however, declined to comment.
The Jaypee Group, having interests in areas such as real estate, cement and hospitality, is the country's third largest cement maker with an installed capacity of 33.5 mtpa.
Though Jaiprakash Associates Ltd, the flagship company of the Group, holds the majority of the cement business, however, operations in Gujarat and Andhra Pradesh having a total capacity of 9.8 mtpa, are under the aegis of Jaypee Cement Corporation. This was hived off for monetising the asset.
Aditya Birla Group, the country's largest cement maker with 54 mtpa capacity, runs cement business through Ultratech Cement and plans to increase its capacity by another 10 mtpa by 2015.
Talks between the two were on for more than one year now. Apart from Ultratech Cement, there were other contenders including French building material major Lafarge, for the acquisition of the unit.
However, Jaypee Cement is believed to be inclined towards the Aditya Birla Group as the two have already transacted once in the acquisition of Bina Power Supply (BPSL). In 2008, a group company of Jaiprakash Associates had acquired BPSL from the Aditya Birla Group.
Jaypee Cement Corporation wants to sell the Gujarat asset for raising some funds and has been mulling a couple of options, including roping in a private equity firm. The proceeds would be used to meet the capacity expansion and retire debt, among others, it had said earlier.
Jaypee Group is working on increasing its cement capacity to 36 mtpa by the end of the current fiscal and is evaluating various locations to take it to 50 mtpa capacity over the next five years.