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The Cabinet Committee on Economic Affairs (CCEA) approved Ambuja Cements Ltd’s planned acquisition of a 24% stake in Holcim India Pvt. Ltd, paving the way for the proposed restructuring of the holding pattern of Holcim’s India units, ACC Ltd and Ambuja Cements Ltd.
“The CCEA approved the proposal of Ambuja Cements Limited for acquisition of 24% shares in its holding company Holcim (India) Private Limited from Holderind Investment Limited and subsequent reverse merger through a share swap. This would entail outflow of Rs.3,500 crore,” a government release said after a cabinet meeting chaired by Prime Minister Narendra Modi.
In a two-stage restructuring announced in July 2013, Ambuja planned to acquire a 24% stake in Holcim India Pvt. Ltd for a cash consideration of Rs.3,500 crore. This was to be followed by a stock merger between Holcim India and Ambuja.
This proposal has now been approved by the CCEA.
“These transactions would enable Lafarge Holcim group to create a linear corporate structure (with Ambuja and ACC becoming parent and subsidiary) with a view to harvest significant synergies from India operations,” the government said.
On 10 July, Lafarge and Holcim announced the completion of their global merger, first announced in April 2014, and launched the new entity, Lafarge Holcim.
Once completed, the restructuring is likely to unlock synergies worth Rs.900 crore per annum in the two Indian subsidiaries, according to a statement put out by Holcim in 2013.
The lack of CCEA clearance so far had delayed the expansion plans of ACC and Ambuja. The companies had not announced any significant investment towards capacity addition since the restructuring was announced in 2013 as they awaited clearance for the restructuring, analysts said. With the clearance now in place, Ambuja Cement as the new holding company may be able to chalk out fresh expansion plans.
On 11 July, LafargeHolcim agreed to sell Lafarge India Pvt. Ltd’s 11 million tonne cement assets to Nirma Ltd for Rs.9,400 crore. Post completion of the deal, Lafarge Holcim will hold roughly 60 million tonnes of cement capacity through the two units—ACC and Ambuja Cements.