Kesoram Industries Ltd. has announced a strategic move to merge its cement business with UltraTech Cement Ltd., aiming to unlock value and streamline its balance sheet. The board of directors of UltraTech has reviewed and approved the proposed scheme of arrangement between Kesoram, UltraTech, and their respective shareholders, as disclosed in UltraTech Cement’s exchange filing.
According to the demerger agreement, UltraTech will issue 1 equity share for every 52 equity shares of Kesoram. Approximately 59.74 lakh new equity shares of UltraTech will be issued to Kesoram shareholders, resulting in an increase in UltraTech’s equity capital to Rs 294.66 crore, comprising 29.47 crore equity shares.
UltraTech is provided with the opportunity to expand its presence in the highly fragmented, competitive, and rapidly growing western and southern markets in India. Simultaneously, the deal is expected to support Kesoram Industries in deleveraging its balance sheet by reducing debt and interest outflows while unlocking the inherent value of its cement business.
Shares of Kesoram Industries closed 4.97% higher at Rs 139.40 apiece, and UltraTech Cement closed 3.11% higher at Rs 9,003.65 apiece on the National Stock Exchange (NSE), outperforming the 0.18% advance in the benchmark Nifty 50.The approved share exchange ratios, suggested by independent valuers, include 1 equity share of UltraTech for every 52 equity shares of Kesoram, along with specific ratios for redeemable preference shares (RPS).
The proposed transaction is now subject to approvals from shareholders, creditors, stock exchanges, the National Company Law Tribunal (NCLT), the Competition Commission of India (CCI), and other regulatory authorities. The completion of the transaction is anticipated within 9-12 months, pending the aforementioned regulatory approvals.
JM Financial Limited is serving as the exclusive financial advisor to Kesoram Industries in this transaction. Independent joint valuers include PwC Business Consulting Services LLP and Bansi S. Mehta & Co., with DAM Capital Advisors Limited providing an opinion on the fairness of the share exchange ratios. Legal advisory services to Kesoram Industries are provided by Khaitan & Co, Kolkata.
