Cement merger on course, says Birla
The UtraTech board has approved in-principle the merger and appointed valuers and investment bankers to determine the valuation of the two companies, said Kumar Mangalam Birla.business Updated: Oct 06, 2009 21:14 IST
The UtraTech board met on Tuesday to discuss the proposed merger of Grasim’s cement business with itself.
The board has approved in-principle the merger and appointed valuers and investment bankers to determine the valuation of the two companies, said Kumar Mangalam Birla.
“We feel that the investor community has over-reacted a bit as what we are doing is merging two legal entities into one. They are already operating together as one company in the backend,” Birla, chairman of the over $29 billion (Rs 1.36 lakh crore) Aditya Birla group of companies said.
Once the merger is complete, the cement business will become a subsidiary of Grasim. Its holding in the new companies would be 55-65 per cent.
Samruddhi, the interim company that would hold Grasim’s cement business till the merger is complete, will be listed for a short while.
“Historically, pure play cement companies have enjoyed higher enterprise value per tonne compared to companies that have cement as one of their products. We expect the merged company to have an enterprise value comparable with peers in India,” said S Misra, MD, UltraTech Cement.