The promoter stake in Orient Cement – held by the Birla family and private investment vehicles – is 37.9%. In anticipation of a sale, the stock has rallied around 37% in the last 6 months.
The transition will trigger an open offer for an additional 26% stake in accordance with takeover laws, which mandate an incoming promoter or controlling entity to buy the additional shares from existing minority investors.
Earlier in August, Adani had acquired Gujarat-based cement maker Sanghi Industries for an enterprise value of Rs 5,000 crore – its first cement acquisition after the $6.5-billion buyout of Holcim’s India assets comprising Ambuja Cement and ACC.
CK Birla’s expectations – of double the current market price to factor in the control premium – could be a deal breaker, ET reported quoting cement industry players.
Orient Cement is believed to be comparing valuation benchmarks with the Ambuja-ACC sale to Adani Cement largely on account of access to limestone reserves that could help double capacity to 16 million tonnes per annum (MTPA).
Adani Cement bought Ambuja and ACC at an implied valuation of $173/tonne of replacement value and $116/tonne on EV/Ebitda basis. Currently, Orient’s per tonne implied valuation is $59/tonne at the current market price.After Sanghi, Adani Group’s total cement capacity has gone up to 110 MTPA. Ambuja Cement has been aiming at a 140 MTPA capacity by 2028.
With an 8.5 MTPA cement capacity that includes a 5.5 MTPA clinker capacity, Orient Cement’s footprint includes manufacturing plants at Devpur (Telangana), Jalgaon (Maharashtra), and Chittpur (Karnataka).
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
Download The Economic Times News App to get Daily Market Updates & Live Business News.
Top Trending Stocks: Sensex Today Live, SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price