Barely four months after entering India through a joint venture with Indorama Cement, HeidelbergCement is set to consolidate its presence through acquisition of a majority stake in Mysore Cements.
The EUR 7.8 billion German cement giant will pick up 51 per cent in the SK Birla group managed-Mysore Cements.
Sources close to the development said the price of the acquisition would be at about a 15 per cent premium over today’s close of Rs 47.95 on the Bombay Stock Exchange.
At this price, the total acquisition cost will be about $100m. A large chunk of this fund will be utilised to clear Mysore Cement’s institutional debt.
The Mysore Cement board will meet tomorrow in Kolkata to approve the private placement of preferential shares to Heidelberg. The board will also issue equity shares to IFCI for part conversion of loan and interest.
The allotment of preferential shares will be subject to shareholders’ approval. It is not known whether HeidelbergCement will come out with an open offer following the acquisition.
Sources close to the development said being a sick company with an accumulated loss of Rs 461 crore, the takeover code norms might not be applicable in this case.
Going by the takeover code guidelines, any acquisition of 15 per cent and above must be followed by an open offer for acquiring another 20 per cent.