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Gujarat Ambuja arm buys 7.2 pc stake in ACC

In a major strategic move, Gujarat Ambuja Cements Limited has acquired 123,000 equity shares of Associated Cement Companies Limited through its wholly owned subsidiary, Ambuja Cement Holdings Limited, from the Tata group.

Gujarat Ambuja has increased its stake from 172 shares to 123,000 by conducting a deal-on-spot delivery basis. This acquisition constitutes 7.2 per cent of the paid-up equity share capital of ACC.

The Tatas have confirmed this transaction through a separate communication to the press by stating that after considering various options, it has divested half of its 14.4 per cent shareholding (7.2 per cent) in ACC at a price of Rs 370 per share to Gujarat Ambuja Cement Limited. The transaction was completed yesterday.

On the basis of this arrangement, the Tatas have invited Narotam Sekhasaria, managing director, Ambuja Cements, to join as a director on ACC's board.

This is the second major acquisition by Gujarat Ambuja in last seven days.

As the first part of a Rs 3.50 billion deal, Gujarat Ambuja has acquired a 31 per cent stake in the Delhi-headquartered DLF Cements for Rs 822.3 million on December 14.

Reacting to the major corporate development, the ACC and Gujarat Ambuja scrip at BSE and NSE hit the upward circuit and posted nearly eight per cent gains over their previous close.

Both ACC and Gujarat Ambuja scrips closed higher by Rs 20 and Rs 36 at Rs 260 and Rs 360.70 from the previous close of Rs 240 and Rs 334 at the BSE.

Similarly, ACC and Gujarat Ambuja closed higher by Rs 17.45 and Rs 29.60 at Rs 255.45 and Rs 363.60 respectively at the NSE from their previous close of Rs 238.00 and Rs 334.

The Tatas in a media statement said that they have retained an option to sell the balance of their holding in future to Gujarat Ambuja if they so wish.

India's cement industry has been seeing upbeat times of late. Sales in April-October 1999 have risen on year-on-year basis. Forecasts point to rising demand and higher prices in the near and medium term.

Analysts said Gujarat Ambuja is seeking to add capacities in time to ride the imminent boom in the industry. On December 14, it acquired Delhi-based DLF cements even as French cement major Lafarge was holding talks with the latter for a buy-out. They said Gujarat Ambuja's aggressive approach could be a strategy to preempt Lafarge's expansion plans in India.

Analysts in Bombay remarked that this is one more instance of Corporate India reinforcing its ability to take on the world. Comparisons are being drawn with Subhash Chandra's Zee group. Zee had took on the multinational Star TV network of media baron Rupert Murdoch to retain its lead in the satellite television segment.

Additional reportage: UNI

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