Holcim streamlines Indian ownership structure

680 Holcim intends to streamline the ownership structure of its operations in India in order to strengthen the existing platform and create value for all stakeholders.

Through intragroup restructuring, Holcim will increase its shareholding in 4380 Ambuja Cements to 61.39% and Ambuja in turn will acquire Holcim’s 50.01% stake in 4577 ACC. Both Ambuja and ACC will continue to operate as separate entities with their own brands and go-to-market strategies. However, the restructuring will allow for closer back-end cooperation between the companies as well as simplify the group structure.

The boards of Ambuja and Holcim have agreed that the transaction will be effected through a merger of Holcim India Private (HIPL), a wholly-owned financial holding subsidiary, with Ambuja. HIPL currently directly holds a 9.76% stake in Ambuja and a 50.01% stake in ACC. In a two-stage deal, Ambuja will first acquire, through a purchase, a 24% stake in HIPL for a cash consideration of INR 35,000 million (US$600 million), followed by a stock merger between HIPL and Ambuja. As part of the merger, Holcim will receive 584 million new equity shares of Ambuja resulting in an increase of its ownership in Ambuja from the current 50.55% to 61.39%. The transaction is subject to Ambuja’s shareholder and regulatory approvals in India.

In addition, Holcim is committing to the Marwar Mundwa expansion project in north-central India with an overall capacity of 4.5million tonnes/year. Holcim is also evaluating additional brown and greenfield investment proposals, such as in ACC Tikaria and Ametha, and will continue to look for opportunities to further optimise its group structure in India.  

“This transaction further improves Holcim’s holding structure in India, strengthens the platform for future growth and is expected to generate synergy benefits of INR 9,000 million ($150 million)/year. These benefits, which will be realised in a phased manner over two years, will be shared by both companies equally through supply chain, shared services and fixed costs optimisation.

“The transaction is expected to be neutral on Holcim’s EPS in the first full year following the completion of the transaction and accretive thereafter,” says CEO Bernard Fontana.