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  1. Doing a rethink: ACC calls off planned merger with Ambuja – Here is why

Doing a rethink: ACC calls off planned merger with Ambuja – Here is why

ACC and Ambuja Cements are part of LafargeHolcim and a merger between the two had been on the cards since 2013.

By: | New Delhi | Published: February 27, 2018 6:43 AM
ACC, ambuja, ambuja cements, LafargeHolcim In May 2017, ACC and Ambuja Cements had said that they were exploring the possibilities of a merger and the boards of the two companies had decided to constitute a special committee of directors with majority of independent directors to consider the matter further. (reuters)

ACC and Ambuja Cements have shelved their merger plans. In a filing to the stock exchanges on Monday evening, ACC said that on the basis of a comprehensive evaluation carried out by both the special committee and the board of directors of the company, “the board is of the opinion that there are at present certain constraints in implementing a merger between the company and Ambuja Cements Ltd”. It added that, therefore, it is not proceeding with the merger at this juncture, though this remains the ultimate objective. In May 2017, ACC and Ambuja Cements had said that they were exploring the possibilities of a merger and the boards of the two companies had decided to constitute a special committee of directors with majority of independent directors to consider the matter further. In the meantime, to maximise synergies between the companies and to unlock value for shareholders, the ACC board on Monday approved an arrangement with Ambuja Cement for mutual purchase and sale of materials and services. “Further details on the above arrangement shall be provided in the notice for the postal ballot which is proposed to be filed with the stock exchanges shortly,” ACC said.

“As the proposed arrangement would be between related parties, the same shall be placed before the shareholders of the company and shall be subject to approval by the majority of the company’s minority shareholders,” the company said.  In May 2017, when the two had initiated the exercise to explore the merger, they had said that a merger could enable them to combine their strengths of business so as to benefit all stakeholders. ACC and Ambuja Cements are part of LafargeHolcim and a merger between the two had been on the cards since 2013. The move would have brought about synergies between the two like a common brand name. If the merger had taken place it could also have brought 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 saw 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% in Ambuja Cements through Holderind Investments. ACC became a subsidiary of Ambuja after the merger of the latter with Holcim (India) in August 2016. 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 which 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.

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