CRH is reported close to picking up 51 per cent stake in Jaiprakash Associates' cement operations in Gujarat at an enterprise value of about INR4200 crore, the Economic Times of India has cited two persons familiar with the development as saying.
The enterprise value of Jaypee Cement Corp, which has two cement plants in Sewagram and Wanakbori-each having a capacity of 2.4Mt, includes debt of about INR1800 crore. The deal will help Jaiprakash Associates pare its debt by about INR1800 crore and will also infuse fresh cash of about INR1200 crore in the company. The company has a consolidated debt of about INR 45,000 crore. ??Under the proposed transaction, the Irish firm has the option to increase its holding to 75 per cent at a pre-determined price.
"CRH will have the right to buy additional 24 per cent stake in next two years, which can be acquired from Jaiprakash Associates at current price plus 16 per cent annualised return, or at an independent valuer- determined market price, whichever is higher," said one of the persons quoted above. "The parties have come to an understanding and documentation process is underway," he added.
At the end of last week, Italian cement producer Italcementi was also reported to be in talks for the stake by local press but has since refuted the claims.