Birla Corp to acquire Lafarge India’s cement units for Rs. 5,000 crore

On Monday, the Birla Corporation agreed to acquire two units of Lafarge India having a capacity of 5.15 million tonnes per annum for Rs. 5,000 crore. The entities being acquired are an integrated cement unit at Sonadih (Chhattisgarh) and a cement grinding unit at Jojobera (Jharkhand), along with the Concreto and PSC brands. Birla Corp is part of the MP Birla Group and Cement, and accounts for around 90 per cent of the revenue.

Birla Corporation said in a BSE filing said ,“It has agreed to a transaction with Lafarge India Private Ltd, whereby Birla Corp, either directly or through its wholly-owned subsidiary, shall acquire both the Jojobera and Sonadih cement businesses from Lafarge India for an Enterprise Value of Rs 5,000 crore.”

Birla Corporation will consolidate its position in the eastern India cement market, where demand prospects are good. The company said the transaction will be funded through existing cash reserves and incremental debt, and is subject to approval of Competition Commission of India and other regulatory approvals.

For the deal, Kriscore Financial Advisors and SBI Capital were the financial advisors for Birla Corp, while Arpwood Capital was the advisor for Lafarge.

Commenting on the transaction, Birla Corp Chairman Harsh Lodha said, “The acquisition Business together with the Concreto and PSC brands, perfectly fit into our strategic vision and ambition of enhancing our competitiveness in our chosen markets.”

Lafarge was forced to sell the two units after Competition Commission of India (CCI) in April this year approved the merger of Holcim and Lafarge on condition that the latter will divest one cement plant and one grinding station in Eastern India. Holcim and Lafarge had announced a USD 44 billion dollar alliance to create the largest cement company in April. The proceeds from the sale of the divestment business will be used to further reduce debt, Lafarge Holcim said. After the divestment, LafargeHolcim will have a cement capacity of around 68 million tonnes in India.