Chettinad Cement Corporation Ltd has entered into a share purchase agreement to acquire up to 61.74 per cent stake in Hyderabad-based Anjani Portland Cement Ltd for Rs 70 crore from the promoters of the company, as per a stock market disclosure. The deal has been struck at Rs 61.75 a share.
It has also triggered an open offer as per SEBI takeover norms. Chettinad Cement has said that its agreement with promoters of Anjani Portland has a built-in flexibility to ensure that its holding is limited at 75 per cent, the maximum allowed for a firm to remain listed. This means the total deal value including the shares bought in the tender offer will aggregate to a maximum of Rs 85 crore.
Motilal Oswal is managing the open offer.
The acquisition will help Chettinad Cement, which is already present in Tamil Nadu and Karnataka, to enter the markets of Andhra Pradesh and nearby Odisha market.
Founded in 1983, Anjani Portland manufactures and distributes cement and cement products and has an integrated cement plant at Nalgonda, Andhra Pradesh with a capacity of 1.2 million tonnes (MT) per annum. For the third quarter ended December 31, 2013, it had net sales of Rs 80 crore with a net loss of Rs 2.7 crore.
Last week, its board had approved the disinvestment of its investments in Vennar Ceramics Ltd (49 per cent holding) and Hitech Print Systems Ltd (100 per cent holding).
The deal values the company at Rs 113 crore. This would translate into a valuation of around Rs 940/tonne.
This would appear to be at a discount to other recent but larger deals in the sector, even after factoring in debt on the balance sheet of Anjani Portland.
Last year UltraTech paid approximately $124 per tonne to buy Gujarat units of Jaypee Cement. In another deal, My Home Industries Ltd, an equal equity joint venture between Irish building materials major CRH and Hyderabad-based My Home Group, struck a deal to buy Sree Jayajothi Cements at an enterprise value of Rs 1,400 crore which translated into $72 per tonne.
For Chettinad Cement, the deal will help in achieving its target of reaching capacity of 15 MT by 2015. It currently has annual cement capacity of over 11.5 MT. It would also make it a strong regional player in southern market.
(Edited by Joby Puthuparampil Johnson)