The Cabinet Committee on Economic Affairs (CCEA) has paved the way for Ambuja Cements to acquire a 24 per cent stake in its holding company, Holcim (India), a move which would lead to an outflow of Rs 3,500 crore from India and be a precursor to a reverse merger through a share swap. The reverse merger was also given a go-ahead by the CCEA.
The proposal allows Ambuja Cements to buy stake from Holderind Investment Limited.
The proposal was something applied for in 2013, but it has been cleared in the immediate aftermath of the conclusion of sale of Lafarge India assets to Nirma. Industry watchers are already wondering if this is just a mere coincidence or if there is more to it than meets the eye.
These transactions would enable LafargeHolcim Group to create a linear corporate structure (with Ambuja and ACC becoming parent and subsidiary) with a view to harvesting significant synergies from India operations.
"This will further strengthen all India footprints, debt-free balance sheet and cash flow generation, bringing in huge prospects for further expansion and creation of employment opportunities," a government statement said.
According to a complex arrangement announced in August 2013 by Holcim, in a two-step process, Ambuja Cements was to acquire 24 per cent in Holcim India – a wholly owned financial holding company of Holcim – for Rs 3,500 crore – followed by a stock merger between the two.
Currently, Holcim India directly holds 9.76 per cent stake in Ambuja and 50.01 per cent in ACC.