Holcim expands India cement stake

By agencies   |   Monday, 30 January 2006, 20:30 IST
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MUMBAI: In order to acquire 14.8 percent stake in Gujarat Ambuja Cements Limited, the world number-two cement maker Holcim has paid $476 million and offered $560 million to buy another 20 percent. The move marks the latest foray by the Swiss firm in the world's second-largest cement market. Holcim already controls 34 percent of Associated Cement Companies Ltd., India's number-two cement producer, through its holding in a Gujarat Ambuja group firm it acquired in early 2005. Gujarat Ambuja, India's third-biggest cement maker with a 13-million-tonne capacity, said its founders sold 200 million shares at $2.32 each, including a non-compete fee of $0.34 per share. Earlier to that, the founders, Sekhsaria and Neotias, held 23.8 percent of Gujarat Ambuja. Commenting on deal, a sectroal analyst with BRICS Securities, Satish Kumar said, “The deal augurs well for the industry as any consolidation brings about some sort of price stability.” Holcim said its offer for 20 percent more of the firm would be at about $2.04 per share. India's cement industry has an annual production capacity of 152 million tones. Work is under way to add nearly 25 million tones over the next three years, to meet demand that is rising 10 percent a year. Kumar said, “Holcim would now have control of almost 33 million tonnes. They should now look to further consolidate their holdings.” Holcim had bought 67 percent of Ambuja Cement India, a group firm of Gujarat Ambuja, a year ago. Ambuja Cement India owns 34 percent of Associated Cement and 97 percent of Ambuja Cement Eastern Ltd.