UltraTech and Samruddhi to Join Hands
In a merger which would result in the formation of India's biggest cement company, Aditya Birla Group's UltraTech Cement and Samruddhi Cement are going to merge, with the former buying out the latter. The merger was proposed in October and received a go ahead from boards of both the firms on Sunday.
With the merger, the company is looking at giving Swiss firm Holcim tough competition. Holcim current holds nearly one-fifth of India's 200-million tonne cement sector, thanks to its partnership with ACC and Ambuja Cement.
"The merger will achieve the group's objective of consolidating its cement business into a single entity, thereby creating a platform that will help in pursuing aggressive growth going forward", said Kumar Mangalam Birla, Chairman of Aditya Birla Group.
The decision to fuse UltraTech and Samruddhi together was put forward in October. The combined company is currently promising yearly production capacity of nearly 50 million tonne.
As per the agreement, Samruddhi shareholders will receive 4 UltraTech shares for ever 7 they hold. In addition, UltraTech will issue 149.5 million new shares, a move which will boost the company's capital to atleast Rs. 2.74 Billion ($59 Million). The merger will make the new company that 10th largest cement firm in the world.
