Orient Cement Limited (‘Orient Cement’) today agreed to acquire Jaiprakash Associates Limited’s (“JAL”) 74% stake in Bhilai Jaypee Cement Limited (“BJCL”) for an Enterprise Value of INR 1,450 crores. The Enterprise Value is on a cash-free, debt-free basis and is subject to adjustments on account of working capital, if any.
BJCL is a Joint Venture between JAL and Steel Authority of India Limited (‘SAIL’) and has an integrated PSC cement capacity of 2.2mtpa consisting of a clinkerisation unit in Satna area in Madhya Pradesh and a grinding unit in Bhilai, Chhattisgarh.
The acquisition is subject to satisfactory negotiation and execution of definitive agreements, requisite approvals from SAIL, the Competition Commission of India and other relevant regulatory and third party approvals. The transaction will be funded by Orient Cement through a mix of internal accruals, debt and equity funding.
The acquisition will provide Orient Cement with high quality assets taking its total capacity from 8.0mtpa to 10.2mtpa, and provide entry into the high growth central and eastern regions. Orient Cement will also benefit from BJCL’s access to limestone reserves and other raw materials including slag.
Orient Cement, is a part of the CK Birla Group with presence across technology, automotive, home and building, healthcare and education sectors. Orient Cement currently has 8.0mtpa of cement manufacturing capacity across 3 units in the states of Telangana, Maharashtra and Karnataka.
CK Birla, Chairman of the CK Birla Group, said: “The demerger of Orient Cement from Orient Paper and Industries Limited was envisioned to create a pure-play cement company which could grow fast. After establishing Orient Cement as one of the most operationally efficient companies, we proudly commissioned our greenfield plant at Gulbarga last year, increasing our capacity by 60% to 8.0mtpa.
The current proposal to acquire BJCL from JAL is a significant step towards accomplishing our current mission of reaching a capacity of 15.0mtpa by 2020. The assets proposed to be acquired will also add a new and strong dimension towards diversifying our market reach and helping Orient Cement to further sweat its existing assets.”
Moelis & Company is the financial advisor, while Cyril Amarchand Mangaldas is the legal counsel to Orient Cement for this transaction.