Competition Tribunal stays Lafarge's India asset sale
14 April 2016
The proposed sale by global cement giant Lafarge of a part of its India business has now come stuck after the Competition Appellate Tribunal stayed the sale of Lafarge India's 11 million tonne cement capacity.
Buyout firm Blackstone Group and cement maker JSW are among the firms that had expressed interest in buying Lafarge India's assets, say reports.
The tribunal's decision comes as a setback to the global merger between French cement giant Lafarge and Swiss building materials firm Holcim.
The order comes on an appeal by Dalmia Cement (Bharat) Ltd over the Competition Commission of India's (CCI) decision to approve an alternative plan by LafargeHolcim, the combined global entity, to complete the India leg of the merger.
LafargeHolcim had proposed the alternative plan after an initial plan fell through.
Dalmia Cement contended that there is no provision under the Competition Act, 2002 for CCI to accept an alternative proposal in a merger case after the antitrust regulator had finalised the terms of the combination.
The tribunal, headed by retired Supreme Court judge and chairman GS Singhvi, issued a notice staying the CCI's 2 February decision and asked the regulator to respond by 9 May.
CCI had, in April 2015, asked LafargeHolcim to divest some assets before it can approve a merger. However, Lafarge India's deal with Birla Corp to sell its cement plants at Jojobera in Jharkhand and Sonadih in Chhattisgarh, with a total capacity of 5.1 million tonnes, for an enterprise value of Rs5,000 crore, fell through and the merger could not be proceeded with.
Birla Corp abandoned the deal as the transfer of mining rights wasn't permitted under the law at that time.
In February, CCI issued a revised order to Lafarge asking it to offload stake in three cements units and two grinding plants of Lafarge India, enabling LafargeHolcim to propose an alternative plan
Dalmia has challenged this CCI order in the tribunal.
Besides Lafarge India's cement plants, Holcim also owns controlling stakes in cement makers ACC Ltd and Ambuja Cements Ltd with a total capacity of around 63 million tonnes. The combined entity will be the second-largest cement maker in India after UltraTech Cement Ltd completes a $2.4 billion deal to acquire two-thirds of Jaiprakash Associates Ltd's cement business.
Lafarge India Pvt Ltd is engaged in manufacturing, importing and supplying cement and building materials for contractors, builders, developers, architects and individual home owners. Its products include concrete cement, concreto cement, construction aggregate, duraguard cement and lafarge portland slag cement.
The company operates three business divisions including cement, aggregates and concrete. The company was incorporated in 1999 and is based in Mumbai, Maharashtra with additional offices in West Bengal, Chhatisgarh, Jharkhand, Bihar, Odisha and Assam. Lafarge India Pvt Ltd operates as a subsidiary of Lafarge S.A.