Holcim’s twin open offers for 37 per cent in Associated Cement Companies (ACC) and 5.9 per cent in Ambuja Cement Eastern, which were slated to open on March 9, have been deferred with the Securities & Exchange Board of India (Sebi) yet to give its final go-ahead.
Holcim, which struck a deal with Gujarat Ambuja Cements earlier this year to take a majority 67 per cent stake in joint venture firm, Ambuja Cement India - the vehicle which will be making the offers - will now have to wait at least till the next week to go ahead with the offers, provided the Sebi okay is received within a day or two.
Gujarat Ambuja group officials said that they have not received any communication from Sebi citing reasons for the delay in issuing the clearances. "Even after Sebi clearance is obtained, it would normally take 4-5 days for the offers to open. Under the circumstances, the earliest that the offer can open is on Monday (March 14), not before that," said Gujarat Ambuja Cements’ executive director Anil Singhvi.
Officials at DSP Merrill Lynch, which is advising Holcim, said they are hopeful that the offers would open sometime next week. "We are not unduly worried as a few days here and there won’t make a big difference. May be the regulator is trying to be very cautious because of the size of the transactions," said a senior DSPML official.
Meanwhile, the proposed acquisition by Holcim - which adds up to a whopping $800m - is yet to obtain the clearance from the Cabinet Committee for Economic Affairs (CCEA), even as it has crossed the FIPB hurdle.
However, sources close to the deal say that the fact that the CCEA clearance is awaited would not come in the way of the open offer. "The delay in the open offers is due to the delay in obtaining the Sebi clearance, and has nothing to do with the CCEA clearance. The approval from CCEA has to be obtained before the payment for the tendered shares is made," sources added.
Ambuja Cement India, already owns 13.8 per cent and 94.1 per cent respectively in ACC and Ambuja Cement Eastern, and successful open offers will increase its stakes in the respective firms to over 50 per cent and 100 per cent.
However, the ACC scrip price, which was on an upswing in recent months, has already pierced the Holcim offer price on expectations of a revision in the offer price, thereby raising doubts about the success of the offer.
In fact, some analysts still believe that Holcim could, in the coming months, come out with a second open offer, at a higher offer price, since the success of the open offer is critical for Holcim.
Unless Ambuja Cement India raises its shareholding to 50.1 per cent, the world’s second-largest player which owns a majority stake in the joint venture, would not have the desired control of the board of ACC, they point out.
"The current stock price is based on fundamentals, as the cement cycle is looking up. Unless the Holcim offer is raised, it is unlikely that it will get in the driver’s seat at ACC. Creeping acquisition is hardly an option as it will be a long-drawn process," said an analyst.