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UltraTech signs deal to acquire the cement business of Jaiprakash Associates

The Economic Times:  January, 2015

Mumbai: UltraTech Cement has signed a definitive agreement to acquire the cement business of Jaiprakash Associates, a deal which will help consolidate its position as India's biggest cement maker.

The acquisition will propel UltraTech's cement capacity to 65 million tonnes per annum from 60 mtpa, the company said in a news release.

The deal was done at a total enterprise value of Rs 5,325 crore - enterprise value includes market cap plus minority interest, preferred shares outstanding and debt, but minus cash and cash equivalents the target company has on hand.

Under the agreement, Ultra-Tech will issue non-convertible debentures worth Rs 4,538 crore to Jaiprakash Associates. The company will also take overRs 636.50 crore of debt.

UltraTech managed to reduce the acquisition cost by Rs 75 crore after the due-diligence which was done after signing the memorandum of understanding in December last year. "The deal will help us scale up our presence in eastern and central UP and eastern and central MP," said Managing Director OP Puranmalka.

UltraTech had last year acquired the Gujarat cement units of Jaiprakash Associates, with a total capacity of 4.8 million tonnes.

It has earmarked Rs 7,000 crore to expand capacities over the next three years. For Delhi-based Jaypee Group, the deal is part of an ongoing exercise to reduce debt, which stood at Rs 65,000 crore as on March 31, 2014.

Shares of UltraTech closed 0.7% higher atRs 3,143.15 Friday on the Bombay Stock Exchange, underperforming the benchmark Sensex that gained 0.9%. Jaiprakash Associates shares gained 3.7% to end at Rs 26.60.