India: Multinational buildings material producer Holcim has released plans to simplify its structure in India by merging Holcim India with its subsidiary Ambuja Cements. Both Holcim's Indian subsidiaries, Ambuja and ACC, have seen net profits fall in the second quarter of 2013.
Holcim intends to increase its shares in Ambuja to 61.39% and Ambuja will acquire Holcim's 50.01% stake in ACC. Both Ambuja and ACC will continue to operate as separately with their own brands. However, the restructuring will allow for closer back-end cooperation between the companies as well as simplifying the group structure.
"This transaction further improves Holcim's holding structure in India, strengthens the platform for future growth and is expected to generate synergy benefits of US$150m/yr. These benefits, which will be realised in a phased manner over two years, will be shared by both companies equally through supply chain, shared services and fixed costs optimisation. The transaction is expected to be neutral on Holcim's EPS in the first full year following the completion of the transaction and accretive thereafter," said Holcim CEO Bernard Fontana.
In a two stage deal, Ambuja will first acquire, through a purchase, a 24% stake in Holcim India for a cash consideration of around US$600m, followed by a stock merger between Holcim India and Ambuja. As part of the merger, Holcim will receive 584 million new equity shares in Ambuja resulting in an increase of its ownership in Ambuja from the current 50.55% to 61.39%.
The transaction is subject to Ambuja's shareholder and regulatory approvals in India.
