Birla Corp could buy cement business of Anil Ambani in Rs 5,000 crore deal – Birla Corp has emerged as the leader to acquire Anil Ambani’s cement business, a wholly-owned arm of flagship Reliance Infrastructure, after a competitive sale process that also witnessed rival offers from leading private equity buyout funds.
The other serious contender in the fight was Blackstone private equity, which had collaborated with Sumit Banerjee, former vice chairman of Reliance Cement.
A final decision is likely in the next fortnight but an announcement may come as early as next week.
In August, Birls Corp agreed to attain two similar-sized assets from Lafarge India for Rs 5,000 crore but that transaction is stuck in a logjam.
Reliance has decided to sell shares in the company that is the owner of the plants, mining concessions and prospective leases to avoid same obstacles. Birla Corp, established in 1919, is part of the MP Birla Group that’s engaged in cement and jute. If the Lafarge and Reliance deals are successful, Birla Corp will have a total capacity of around 16 MTPA.
Reliance Infrastructure had authorized Morgan Stanley and SBI Caps to manage the sale process. The original strategy expected most of the units being set up in Madhya Pradesh on the strength of the group’s Sasan ultra mega power project. The idea was to make use of fly ash generated from the power plant at the cement units ? fly ash is a main raw material for cement. Ambani had even hired Ambuja Cements’ former managing director Anil Singhvi to head the group’s entry into the segment but he left after the initial years.
According to analysys, Reliance Cement will do good to Birla Corp in ways that are similar to Lafarge in terms of operational synergy and consolidating market share in east and central India.