UltraTech To Buy Kesoram Industries' Cement Business For Over Rs 5,300 Crore

Kesoram Industries Ltd. announced on Thursday that its cement business will be merged with UltraTech Cement Ltd. for about Rs 5,379 crore, to unlock its value and deleverage its balance sheet.

The board of directors of UltraTech considered Kesoram's proposal and approved a scheme of arrangement among Kesoram, the company and their respective shareholders, UltraTech Cement said in its exchange filing.

Under the demerger agreement, UltraTech will issue 1 equity share for every 52 equity shares of Kesoram.

About 59.74 lakh new equity shares of UltraTech will be issued to the shareholders of Kesoram. This will increase UltraTech's equity capital to Rs 294.7 crore, consisting of 29.47 crore equity shares.

The transaction will provide UltraTech with the opportunity to extend its footprint in the highly fragmented, competitive and fast-growing western and southern markets in the country, UltraTech Cement said.

The deal will assist Kesoram Industries in deleveraging its balance sheet, including reductions in debt and outflows of interest, and unlocking the value of its cement business, the company said.

The transaction will provide UltraTech with the opportunity to extend its footprint in the southern markets of the country. "It will help enhance UltraTech's geographic reach in southern markets, such as Telangana where UltraTech currently does not have any cement manufacturing plant."

The agreement is subject to regulatory approval and after it, UltraTech's cement capacity will rise to 149.1 million tonne per annum, including its overseas operations.

Kesoram's current cement business consists of two integrated cement units in Karnataka and Telangana, with a total capacity of 10.75 MTPA.

Shares of Kesoram Industries closed 4.97% higher at Rs 139.40 apiece and UltraTech Cement closed 3.11% higher at 9,003.65 apiece on the NSE compared to a 0.18% advance in the benchmark Nifty 50.