On Sunday, the board of directors of UltraTech Cement Ltd. approved the acquisition of BK Birla Group company Century Textiles' cement business as it looks to focus on the real estate business and pare its debt. With the consummation of the transaction, the position of UltraTech as the market leader in the cement business will be further strengthened.
The enterprise value of Century's cement business is pegged at Rs. 8621 crore. MD of UltraTech Cement, KK Maheshwari said, "Of the Rs 8,621 crore, Rs 3000 crore is debt, which is being taken over by UltraTech. The remaining Rs 5,621 crore will be by way of issuance of equity shares directly to the shareholders of Century.
For 8 shares of Century Textiles with a face value of Rs. 10 each, the company's shareholders will be issued 1 share of UltraTech of face value Rs 10. In total, Ultratech will issue 1.4 crore new equity shares to Century Textiles shareholders'. As a result, company's equity capital will be increased to Rs. 288.58 crore while its total equity shares will now stand at 28.86 crores equity shares of Rs 10 each. The transaction is subject to necessary approvals and is expected to be completed within next six to nine months.
The acquisition will enable UltraTech to augment its earnings with increased capacity as through the deal the company will take over three integrated cement facilities' of Century with a combined capacity of 11.4 metric tonnes per annum based out of MP, Maharashtra and Chhattisgarh. In addition UltraTech will also acquire Century's grinding facility in WB with a capacity of 2 mtpa. Consequently, UltraTech's cement capacity will be enhanced to 109.9 mtpa that includes its offshore operations. With the strategic deal, UltraTech will rank as the third largest cement company globally.
The Birla Group Company said, the deal will strengthen UltraTech's presence in the east and central markets and also extend its footprint in the southern and western markets in India.