Portuguese firm buys Digvijay Cement
Grasim Industries sells unit to Cimpor for Rs 322 crore
Grasim Industries, a part of the Aditya Birla group, has decided to sell 53.3 per cent stake in Shree Digvijay Cement Company (SDCC) to Cimpor, a Portuguese cement maker, for Rs 322 crore.
At Rs 42.50 a share, the acquisition provides Cimpor, or Cimentos De Portugal, the world’s ninth largest cement company, an opportunity to enter the country’s booming 173 million tonne a year cement industry which is investing over Rs 50,000 crore for ramping up the capacity.
Cimpor will also come out with a mandatory open offer for another 20 per cent at the same price. The open offer announcement is expected to be done within four days. The deal has put the enterprise value of the company at $162 per tonne.
With the acquisition, Cimpor’s total capacity will rise to 29.5 million tonnes. The company said the entry into India is “obviously a start” and is eyeing more companies. The Portuguese company operates in twelve countries and has been acquiring cement firms in high growth markets.
Kumar Mangalam Birla, chairman, Aditya Birla Group, had bought SDCC from the Kolkata-based Bangur family in 1998 for Rs 66 crore.
It was one of Birla’s first major acquisitions when he became the chairman of the group after the demise of his father, Aditya Vikram Birla. SDCC had a turnover of Rs 182 crore company when it was first bought. The company’s sales now stand at Rs 289 crore.
The acquisition initially went sour as the company slipped into the Board for Industrial and Financial Reconstruction’s (BIFR) net. It came out of the BIFR purview only recently.
The top management of Grasim said that the Birla group is ramping up capacities from 30 million tonnes per annum (mtpa) to 45 mtpa by the second quarter of FY09, even after selling SDCC which has capacity of 1 million tonne. SDCC has a jetty in Gujarat which was valued at Rs 100 crore when Birla purchased it.
For the Birla group, analysts said, cement is the main focus area. Given the fact that limestone availability near the SDCC plant is not enough to sustain production for long, the group sold the company at a decent price, they added.
The SDCC stock today closed at Rs 38.50, down 3.39 per cent against yesterday’s close on the Bombay Stock Exchange.
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CONCRETE GAINS
Kumar Mangalam Birla, chairman, Aditya Birla Group, bought Shree Digvijay Cement from the Bangur family in 1998 for Rs 66 crore
Cimpor will make the mandatory open offer – expected within a few days – to pick up 20 per cent at the same price. It is scouting for more acquisitions
SDCC has 1.07 mtpa capacity and is free from BIFR radar
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