The world?s second largest cement manufacturer, the Holcim Group, has finally gained majority stake in its Indian subsidiaries ACC and Ambuja Cement through the creeping acquisition route. The Swiss major on Friday acquired another 3.562% in Ambuja through open market purchase, increasing its stake in the company to 50.002% from 46.44%. It also increased its stake in ACC by 0.8% and now holds 50.1%.
The possibility of a merger between ACC and Ambuja Cements has been the talking point among industry players for a long time. However, both the companies have denied this. Brokerage JP Morgan noted that the purchase of the additional equity by Holcim, by which it would have the majority holding, had resulted in speculation that a merger would follow. That had resulted in the shares of both entities trading at valuations significantly above those of their peers.
ACC had earlier said that the company?s expansion to 30 mtpa would take its market share to more than 11% in Q1CY11 from 10.2% in 2010. Addressing the company’s 75th AGM Kuldip Kaura, CEO and MD had said, ?The company’s capex was R825 crore in 2010 and going ahead it is in the process of exploring organic and inorganic expansions.? Kaura denied plans of a merger between ACC and Ambuja currently.
Experts believe that the merger may be part of a long-term plan though the timing is hard to guess. With a capacity of over 285 million tonnes, India is the world’s second largest cement market and expected to grow at 8-9% annually. Shares of ACC on Wednesday slipped 5.17% to close at R1,024.50 on the Bombay Stock Exchange while the Ambuja stock lost 5.31% ending at R141.75.
