Kumar Mangalam Birla’s UltraTech is in advanced talks with CK Birla, the promoter of Orient Cement, to acquire the company. This move is part of UltraTech’s efforts to strengthen its position in southern and western India, especially in Maharashtra and Telangana.
Kumar Birla’s renewed interest in Orient Cement comes after UltraTech recently bought a 23% stake in India Cements. Adani Cement has also been interested in Orient Cement but has faced issues with valuation and environmental clearances.
Orient Cement has a market value of Rs 6,290.50 crore. UltraTech has offered a price of Rs 350-375 per share, which is a 22% premium to the current market price. This translates to an enterprise value of Rs 7,300-7,800 crore.
Deepak Khetrapal, CEO of Orient Cement, denied any discussions about the sale. However, sources suggest a formal announcement could come before Orient Cement’s earnings report on July 19.
If successful, this acquisition will help UltraTech reach its goal of 200 million tons per annum capacity by 2027. UltraTech’s current capacity is 152.69 million tons per annum.
The acquisition talks also involve the renewal of a mining lease in Telangana, which is crucial for Orient Cement’s operations. Orient Cement has been expanding its capacity and focusing on premium cement sales, which have contributed to its higher valuation.
In recent years, UltraTech has made several acquisitions to expand its capacity, including Century Textiles and Kesoram Industries. The outcome of these negotiations will significantly impact the competitive landscape in the cement industry.