JSW Cement Buys Out Shiva Cement Promoters, Launches Open Offer
JSW Cement buys Shiva Cement promoter’s 35.62 percent stake.
The consolidation in the cement sector continues. JSW Cement Ltd. will acquire the entire 35.62 percent stake held by the promoters of Shiva Cement Ltd., and launch an open offer to buy additional 32 percent in the Odisha-based company.
Shiva Cement’s promoters will offload their entire holding of 69,453,817 equity shares to JSW Cement, Sun Investments Private Ltd., and Reynolds Traders Private Ltd., according to the company’s filing to the exchanges. At Rs 14 per share, JSW Cement and the two group companies will pay Rs 97.24 crore for the stake. The company will also take over Shiva Cement’s Rs 65 crore debt.
“With this acquisition, the eastern market would be fed with clinker produced by the Shiva Cement unit,” JSW Cement Director and Chief Executive Officer Anil Kumar Pillai told BloombergQuint on the phone.
As part of the expansion plan JSW Cement has embarked upon, the company has been intending to foray into the eastern market. The company is coming up with 2.4 million tonne of capacity in West Bengal, which would be commissioned in the current financial year by March-April. JSW Cement also plans to put up a 1.2 million tonne grinding unit at Odisha. These capacities would have otherwise used imported clinker.Anil Kumar Pillai, Director and CEO, JSW Cement
JSW Cement, part of the $11 billion JSW Group, will launch an open offer for 62,400,000 fully paid-up equity shares of Shiva Cement constituting 32 percent of the total share capital. If the open offer is successful, JSW Cement will hold 67.62 percent of the total share capital of Shiva Cement.
Expansion Plans
JSW Steel’s current capacity stands at 8 million tonne, and “by the end of the year 4.8 million tonne of additional capacity shall come on stream", according to Pillai.
By 2018, we further plan to scale up our capacity to 18 million tonne.Anil Kumar Pillai, Director and CEO, JSW Cement
Cement Consolidation
The JSW Cement-Shiva Cement deal is first in the cement industry in the new year, and follows a string of such deals in 2016.
- October 2016: Orient Cement Ltd. acquired 74 percent stake in Bhilai and Nigrie units from debt ridden Jaypee group at an enterprise value of Rs 1,950 crore.
- August 2016: Birla Corporation Ltd. completed the acquisition of Reliance Infrastructure Ltd.’s cement business for an enterprise value of Rs 4,800 crore.
- July 2016: UltraTech Cement Ltd. inked a deal to acquire Jaypee Group’s cement assets in Uttar Pradesh, Madhya Pradesh, Himachal Pradesh, Uttarakhand and Andhra Pradesh for Rs 16,189 crore.
- July 2016: Nirma Ltd. acquired Lafarge’s India assets in the eastern region for an enterprise value of Rs 9,400 crore.