(Bloomberg) -- UltraTech Cement Ltd. bought almost a third more of India Cements Ltd. to secure a controlling stake, as billionaire Kumar Mangalam Birla’s firm seeks to fend off competition from aggressive newcomer Adani Group.
India’s largest cement maker will pay 39.54 billion rupees ($472 million) to acquire an additional 32.72% in India Cements, it said in an exchange filing Sunday, with company founders selling 28.42% and the rest coming from another shareholder, Sri Saradha Logistics Pvt. With almost 23% bought in June, Birla’s firm now owns 55.5% in the Chennai-based cement maker.
UltraTech also announced the mandatory open offer to acquire up to 26% from the market at 390 rupees a share — a 4.3% premium to India Cements’s closing share price on Friday.
The latest acquisition marks an escalating turf war in India’s cement sector as both Birla and billionaire Gautam Adani’s upstart race to scale up by buying smaller rivals. Demand for cement — a key building material — is likely to surpass supply for the next few years as Prime Minister Narendra Modi’s nation-building push stokes a massive infrastructure overhaul in the country.
“The India Cements opportunity is an exciting one as it enables UltraTech to serve the Southern markets more effectively and also accelerates our path to 200+ million tons per annum capacity,” Birla said in a statement Sunday after the deal was announced.
India Cements will add 14.45 million tons to UltraTech, which aims to boost its current 150 mtpa capacity to 200 mtpa by 2027.
Adani, which overnight became India’s No. 2 cement maker after buying Ambuja Cements Ltd. and ACC Ltd. in 2022, is also targeting to double its production capacity to 140 million tons by 2028 and has been snapping up smaller companies.
Adani’s Ambuja Cements announced the acquisition of Penna Cement Industries Ltd. in a $1.2 billion deal last month to strengthen its presence in the southern regions of India — the same geography where UltraTech has now been boosted by getting a controlling stake in India Cements.
After the initial June transaction, India Cements’s founders “approached us as they wanted to sell their holding in the company, and we found it appropriate to acquire their stake,” UltraTech said in the statement.
The latest transaction, expected to be completed in six months, is subject to regulatory approvals including from the Competition Commission of India.
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