UltraTech merger gets nod; swap ratio at 4:7

The consolidation process of cement business within the Rs 1.34 lakh-crore Aditya Birla Group crossed a significant milestone on Sunday, with the boards of directors of both UltraTech Cement and Samruddhi Cement, a wholly owned subsidiary of Grasim Industries, approving Samruddhi’s merger with UltraTech. The exchange ratio for the merger was pegged at 4:7. Samruddhi shareholders will receive four shares of UltraTech at a face value of Rs 10 each for every seven shares of face value Rs 5 each. UltraTech will also issue 14.95 crore new shares, thereby increasing its equity capital to Rs 274.20 crore.

The deal will make UltraTech, already the largest cement company in India, the 10th largest in the world. The merger will take UltraTech into the big league of cement makers such as Lafarge, Holcim and Heidelberg. The merged entity will have 48.8 mtpa of grey cement across 22 plants and 11.7 million cubic metres of ready-mix concrete across 68 plants, along with captive thermal power plants generating 504 mw. Prior to the merger, UltraTech had a capacity of 23.10 mt, and Samruddhi 22.55 mt. Samruddhi will also commission a grinding unit at Kotputli in Rajasthan by the third quarter of FY10. Domestically, UltraTech leads the pack, followed by ACC (22.7 mt) and Ambuja Cement (21.9 mt).

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