Holcim Hikes Stake In Ambuja Cements

India''s infrastructure story is gaining strength and Holcim wants to build a stronger foundation.After posting a three-fold rise in profits for the first half of the year, the Swiss building materials giant is pumping in big money to take complete control of one of its Indian affiliates-Ambuja Cements.

Holcim, which owns 32.3 per cent in Ambuja said on Thursday that it is buying 3.9 per cent from its erstwhile promoters at Rs 154 per share. It will be followed by an open offer for an additional 20 per cent.

The open offer has been priced at 18 per cent premium over Ambuja Cement''s closing price on Wednesday. If fully subscribed the offer will cost Holcim $1.3 billion and increase its stake in Ambuja to over 56 per cent.

The enterprise value per tonne works out to $300, the highest for any cement capacity globally. And one reason why Holcim is paying so much for taking control of Ambuja is because it wants to consolidate Ambuja''s financials with the group balance sheet.

But will the offer be tempting enough for Ambuja shareholders who had rejected Holcim''s initial open offer after it bought into Ambuja in January 2006.

Industry observers are divided, but there are others like Ambuja''s former CEO Anil Singhvi who feel that Holcim offer will get decent response this time around.

Holcim is clearly betting on India where cement demand is growing at over 12 per cent as against 3 per cent in its own backyard in Europe. Its next challenge however will be to take a majority stake in ACC, its other affiliate and possibly to merge the two companies at some later stage.

Source : www.indian-commodity.com