JSW Cement, Nirma, Cemex among bidders for Lafarge India assets

REUTERS/Arnd Wiegmann

LafargeHolcim Ltd has received five final bids for Lafarge’s India assets that the Franco-Swiss company is forced to sell to win antitrust approval following a merger that created the world’s largest cement maker, said four people directly familiar with the matter.

Piramal Enterprises Ltd, JSW Cement Ltd, Nirma Ltd, China’s Anhui Conch Cement Co. and Mexico’s Cemex SAB have submitted their bids, three people cited above said, requesting anonymity.

“At present, bids have been submitted alone by the bidders, but JSW Cement is being backed by a private equity fund for the transaction,” said one of the persons mentioned above. Mint could not independently ascertain the name of the fund that is backing the Sajjan Jindal-controlled cement maker.

A fifth person involved in the process said that another entity may submit a bid by Tuesday.

“The bids are more or less in the range of Rs.8,000-9,000 crore. Earlier, it was pegged to be around Rs.10,000 crore, but after the initial due diligence the valuation has come down,” said a second person cited above.

JSW, Cemex and Piramal Enterprises declined to comment. A Nirma spokesperson could not immediately be reached for comment. Mint could not reach Anhui Conch either.

The value of the transaction may increase after the final negotiations are concluded, said Deepak Ladha, India head at investment bank Global M&A Partners.

“These are the first set of serious final bids that have come. Once the entire process comes down to one or two final bidders, then there would be upward revision in the deal value,” Ladha said.

Among the bidders that had shown interest in the initial rounds were Goldman Sachs Group Inc., CVC Capital Partners, Irish cement maker CRH Plc., Blackstone Group, CPP Investment Board, Ramco Group and Carlyle Group,Mint had reported on 9 May.

Lafarge is selling its entire 11 million tonne capacity to meet a Competition Commission of India merger condition. Lafarge owns cement capacity across Chhattisgarh, Jharkhand, Rajasthan, Haryana and West Bengal through its unit, Lafarge India Pvt. Ltd.

Lafarge India’s attempts to sell the assets to meet competition norms emerging from the combination of France’s Lafarge SA and Swiss company Holcim Ltd have faced several obstacles over the past one year.

Lafarge entered into a deal with Birla Corp. in August 2015 for its east India assets. The transaction was called off on 2 February because of regulatory hurdles over the transfer of related mine leases. This prompted LafargeHolcim to put Lafarge India’s entire capacity on sale.

However, on 14 April, a day after the non-binding bids were submitted, the Competition Appellate Tribunal stayed the sale of 11 million tonnes of cement capacity held by Lafarge India following an appeal by cement maker Dalmia Cement (Bharat) Ltd. Dalmia withdrew its appeal on 9 May, allowing the bidding process to resume.

Lafarge India through its brand Concreto enjoys a premium over other brands, including that of Dalmia, in eastern India.

The cement sector has seen a wave of consolidation in the past year.

According to a 17 March report by JPMorgan, the exit of distressed players will lead to better pricing power in the sector. “The industry is witnessing significant market consolidation in calendar year 2016 with the exit of three major cement players—namely, JPA (Jaiprakash Associates), Reliance, Lafarge—10% of industry capacity,” noted the report.

In a separate transaction on Monday, UltraTech Cement Ltd offered to pay a higher price for acquiring the cement assets of Jaiprakash Associates Ltd. The total enterprise value of Jaiprakash’s assets that UltraTech has agreed upon is Rs.16,189 crore, an increase of Rs.289 crore over the initial agreement.

Also read:

JSW Steel seeks to raise up to $2b via foreign currency bonds

India: JSW Ventures gets Sebi nod for $15m fund, to invest in tech startups

This article was first published on Livemint.com

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.