Cement Wars Heat Up As Ultratech Reportedly Back In Talks To Acquire Orient Cement

Industrialist Kumar Birla is back in the foray to acquire Orient Cement, a move aimed at strengthening Ultratech’s presence in South India, as reported by The Economic Times on Thursday.

What Happened: UltraTech is currently in advanced discussions with CK Birla, Kumar Birla’ uncle and the promoter of Orient Cement, following the resumption of talks in recent weeks, the report said.

The promoter stake in Orient Cement, held by the Birla family and private investment vehicles, stands at 37.9%. The company currently has a market value of ₹6,000 crore. UltraTech is said to have offered a price of ₹350-375 per share, representing a 22% premium over the current market price of ₹310.

UltraTech’s offer equates to an enterprise value of ₹7,300-7,800 crore ($840-$938 million) or $109-110 per ton based on Orient Cement’s current installed capacity of 8.5 million tons per annum. This valuation is consistent with recent transactions in the range of $90-110 per ton for mid-tier cement companies, the report added.

The acquisition of Orient Cement could significantly enhance Ultratech’s footprint in the southern market, a key area for the company’s expansion plans. Birla’s re-entry into the race underlines his determination to bolster Ultratech’s position in the cement industry in a bid to trump Adani. However, details about the potential deal or other contenders for Orient Cement have not been disclosed.

Adani, holding India’s second-largest cement capacity, has been in discussions with CK Birla since late last year but is reportedly hesitant due to the valuation demanded.

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In June 2024, Ultratech acquired a 23% stake in India Cements for ₹1,885 crore, a move that saw its shares surge by 5.5%. This acquisition was seen as a counter to the growing might of the Adani Group in the cement industry.

Around the same time, Ambuja Cements, an Adani Group firm, acquired Penna Cement for ₹10,442 crore. This acquisition was part of Adani’s ambitious goal of reaching a capacity of 140 million tonnes per annum by 2028 and capturing a 20% market share.

Birla’s latest move to acquire Orient Cement can be seen as an attempt to consolidate Ultratech’s position in the face of increasing competition and a rapidly consolidating industry.

Price Action: Shares of Ultratech were 0.32% up at ₹11,910.15. Orient Cement was trading 2.63% high at ₹314.30. Ambuja Cements was down 0.68% at ₹688 on Thursday morning.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

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Posted In: EquitiesM&ANewsContractsMarketsACCAdani GroupAmbuja CementsC.K. Birla GroupUltratech Cement