CK Birla eyes Adani deal, Orient Cement stake up for grabs
Cement

CK Birla eyes Adani deal, Orient Cement stake up for grabs

Industrialist CK Birla has turned to Gautam Adani to sell his promoter stake in Orient Cement, a listed company, after rejecting initial offers from other domestic players that didn't meet his valuation demand. Talks between the two parties have been ongoing for the past few months, involving senior management executives from both sides. Birla had enlisted JP Morgan earlier in the summer to find a buyer for his business.

The promoter stake in Orient Cement, held by the Birla family and private investment vehicles, amounts to 37.9% with a current market value of Rs 3,878 crore. The company's stock price surged by 29% in the past three months in anticipation of a potential sale. Once the transition occurs, it will trigger an open offer for an additional 26% stake in compliance with takeover laws, requiring the incoming promoter or controlling entity to buy these additional shares from existing minority investors.

Adani Cement, which already owns India's second-largest cement capacity, is considering this opportunity. However, formal talks have only recently taken place, and there's no guarantee that the discussions will result in a transaction, as cautioned by insider sources.

Birla's expectations of a significantly higher valuation, doubling the current market price to factor in the control premium, could pose a challenge to the deal. Orient Cement is evaluating valuation benchmarks based on the Ambuja-ACC sale to Adani Cement, primarily due to access to limestone reserves that could potentially double the company's capacity to 16 million tonnes per annum (MTPA). While JSW Cement did express interest with a non-binding offer, it did not progress further.

Access to limestone reserves is a crucial factor in such deals, as it helps in increasing manufacturing capacities. Adani Cement's recent acquisition of Sanghi Industries for Rs 50 billion emphasised the importance of limestone reserves in determining premium valuation. Orient Cement's current footprint includes manufacturing plants in Telangana, Maharashtra, and Karnataka, supplying to 11 states in central, western, and south India. The company plans significant capital expenditure, particularly for its Karnataka unit, in the coming months.

Industrialist CK Birla has turned to Gautam Adani to sell his promoter stake in Orient Cement, a listed company, after rejecting initial offers from other domestic players that didn't meet his valuation demand. Talks between the two parties have been ongoing for the past few months, involving senior management executives from both sides. Birla had enlisted JP Morgan earlier in the summer to find a buyer for his business. The promoter stake in Orient Cement, held by the Birla family and private investment vehicles, amounts to 37.9% with a current market value of Rs 3,878 crore. The company's stock price surged by 29% in the past three months in anticipation of a potential sale. Once the transition occurs, it will trigger an open offer for an additional 26% stake in compliance with takeover laws, requiring the incoming promoter or controlling entity to buy these additional shares from existing minority investors. Adani Cement, which already owns India's second-largest cement capacity, is considering this opportunity. However, formal talks have only recently taken place, and there's no guarantee that the discussions will result in a transaction, as cautioned by insider sources. Birla's expectations of a significantly higher valuation, doubling the current market price to factor in the control premium, could pose a challenge to the deal. Orient Cement is evaluating valuation benchmarks based on the Ambuja-ACC sale to Adani Cement, primarily due to access to limestone reserves that could potentially double the company's capacity to 16 million tonnes per annum (MTPA). While JSW Cement did express interest with a non-binding offer, it did not progress further. Access to limestone reserves is a crucial factor in such deals, as it helps in increasing manufacturing capacities. Adani Cement's recent acquisition of Sanghi Industries for Rs 50 billion emphasised the importance of limestone reserves in determining premium valuation. Orient Cement's current footprint includes manufacturing plants in Telangana, Maharashtra, and Karnataka, supplying to 11 states in central, western, and south India. The company plans significant capital expenditure, particularly for its Karnataka unit, in the coming months.

Next Story
Real Estate

Rethinking Slum Development

In July 2024, the Supreme Court directed the Bombay High Court to initiate suo motu proceedings to evaluate the implementation of the Maharashtra Slum Area (Improvement, Clearance and Redevelopment) Act.During the ensuing proceedings, the Division Bench of Justices expressed concern about the plight of slum dwellers, saying, “Merely because you are a slum dweller doesn’t mean that you are left to the discretion of developers. They end up with a pittance.” The Bench also noted that the buildings allocated to slum dwellers were akin to “vertical slums”. “The buildings are congested. ..

Next Story
Real Estate

Ring in the New!

Lighting:OLED (organic light emitting diode) panels such as those by Philips are the latest option in soft lighting fixtures that can be embedded into walls, ceilings or furniture, says Nilesh Sawant, Principal Architect, Nilesh Sawant Architect. “Being thin and flexible, they lend themselves well to different applications while delivering the energy-efficiency associated with LED technology.”And Sapna Aggarwal, Founder, ANSA Architecture & Interiors, says “Embedded light-emitting diodes can create a dreamy illumination, while dimmable LEDs are useful for allowing..

Next Story
Infrastructure Urban

Jhansi Library

The Jhansi Library, commissioned by the Jhansi Development Authority (JDA) under the Jhansi Smart City initiative and built by Bootes Impex, a net-zero construction-tech company. It is the first library in Asia to achieve EDGE (Excellence in Design for Greater Efficiencies) certification from the International Finance Corporation (IFC), a member of the World Bank Group. This milestone marks the library as India’s first and only net-zero library, aligning  with India’s Net-Zero Vision 2070.Sustainable designDeepak Rai, Managing Director, Bootes Impex, explains, “The project's vision ..

Hi There!

"Now get regular updates from CW Magazine on WhatsApp!

Join the CW WhatsApp channel for the latest news, industry events, expert insights, and project updates from the construction and infrastructure industry.

Click the link below to join"

+91 81086 03000