Jaypee Group, an infrastructure and real estate major, is acquiring a controlling stake in GP Goenka group’s Andhra Cements. It is the second transaction between the two groups in the last 18 months.
The deal involves Jaypee Development Corporation, a privately held arm of the group, acquiring 66.7 per cent in Andhra Cements for Rs 234.7 crore. This will be done through share purchase from the GP Goenka group and a preferential allotment of fresh shares, followed by an open offer. While Rs 177 crore will be used for fresh equity infusion, the remaining will be used to buy a part of the stake currently held by the GP Goenka group. GP Goenka will remain a minority shareholder in Andhra Cements after the transaction.
The deal between Jaypee and GP Goenka has been struck at Rs 12 per share, 15 per cent premium to Tuesday’s closing price of Andhra Cements which stood at Rs 10.46. Shares of the company were trading at Rs 10.98 per unit, up 4.97 per cent, at 2 pm on Wednesday.
Last year, GP Goenka-controlled Duncans Industries offloaded a controlling stake in its closed fertiliser division to the Jaypee group, which had recently hosted the maiden Formula 1 race in India.
The units of Andhra Cements are currently not operational and the company reported a loss of Rs 35.5 crore on net sale of Rs 65.5 crore last year. Once the current expansion plan of Andhra Cements is completed, Jaypee can add another 3.5 MnTPA to its capacity.
Jaypee Group is the third largest cement producer in India with facilities in Uttar Pradesh’s Satna Cluster. The group sells under the brand name Jaypee Cement, with an aggregate installed capacity of 26.20 MnTPA which it expects to expand to 35.90 MnTPA by FY12.