BS reported that the merger of ACC and Ambuja Cements, the companies controlled by Holcim, the Swiss cement major, has been deferred indefinitely.
An investment banker, privy to the development, said that "The parent company has been doing creeping acquisition of five per cent every year and the merger is not on the cards. They have a common treasury, marketing and technical advisory, and they are not looking at spending money on merging, as there are some markets where either of them are not present."
A senior analyst from a domestic brokerage tracking the company said that "Though they had hired consultants to merge the companies, it had a lot of problems. On branding, unlike Grasim, which was already selling under the UltraTech name, here both the brands sell under their own names and in many markets they sell together. In the south, Ambuja does not sell, but ACC does. Merging would have meant consolidation of brands and it was a tougher call to decide which brand to keep and which to offload."
The problem didn't end there. The share swap ratio also played a spoiler.
An official close to the development said that "ACC was keen on a swap ratio of four or five shares of Ambuja to one share of ACC, which Ambuja has rejected."
In the run up to the merger, Holcim had first hired Hewitt Associates in August 2010, for organizational restructuring of the companies. Holcim had mandated that all subsidiaries under ACC should be brought under one book.
In February 2011, ACC's board meeting had approved the scheme of amalgamation of its wholly owned subsidiary companies, Lucky Minmat Limited, National Limestone Company Pvt Limited and Encore Cement & Additives Pvt Limited with the company. The move was taken to help Ambuja get direct access to the limestone that would come with the merged entity. With the merger now off, the company is looking at standalone acquisitions.
In the next 5 years, Holcim is set to invest INR 4,700 crore on three new factories. It is aggressively looking at acquiring companies in the central and southern belts.
(Sourced from www.business-standard.com)
