Ultratech buys part of Jaypee Group's cement business for Rs15,900 crore

Kumar Mangalam Birla-led Ultratech has acquired part of debt-ridden Jaypee Group's cement business for Rs15,900 crore, in one of the biggest M&A deals in the domestic cement industry.

The transaction, involving an overall cement capacity of 21.2 million tonnes per annum (MTPA) from Jaypee's cement plants across five states, including Madhya Pradesh, Uttar Pradesh, Andhra Pradesh and Karnataka, and a grinding unit in Uttar Pradesh, cold make Ultratech possibly the biggest cement player in the country.

With this acquisition, Ultratech will have overall cement capacity of 91.1 MTPA, including its overseas operations, while JAL's cement capacity will come down to 10.6 MTPA .

The value of the transaction, however, has been reduced from Rs16,500 crore announced last month as the current transaction excludes Jaiprakash Associates'  Karnataka plant with a capacity of 1.2 MTPA.

In a filing with the Bombay Stock exchange (BSE) JAL said its board on Thursday approved the definitive agreement with Ultratech Cement (UTCL) for sale of part of its cement business.

It includes "cement plants with an aggregate capacity of 17.2 MTPA spread over the states of Uttar Pradesh, Madhya Pradesh, Himachal Pradesh, Uttarakhand and Andhra Pradesh, besides a grinding unit of 4 MTPA capacity, which is currently under implementation in UP".

Both the parties have mutually agreed to exclude Shahabad plant in Karnataka from the transaction, it added.

"The total enterprise value is Rs15,900 crore and an additional amount of Rs470 crore shall be paid by UTCL for completion of the grinding unit under implementation," it said. The transaction is subject to various regulatory approvals.

Standard Chartered Bank was advisor to Ultratech in the transaction, while Cyril Amarchand Mangaldas acted as legal advisor and EY carried out the financial due diligence.