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UltraTech leading race to acquire Jaypee’s 20 mt cement capacity

Aditya Birla Group’s UltraTech Cement Ltd is front runner in the race for Jaiprakash Associates Ltd’s entire 20 million tonne cement capacity, according to two persons familiar with the situation.

UltraTech is offering an enterprise value of around Rs.18,000 crore for these assets, according to one of the two persons.

UltraTech is one of three bidders for Jaiprakash’s assets,Mint reported on 19 February.

The other bidders are private equity firm KKR & Co. and Dalmia Cement (Bharat) Ltd.

“UltraTech is in the advanced stage of acquiring Jaiprakash Associates’ cement assets. The company is working on various modalities for this acquisition,” said the first person, who spoke on condition of anonymity.

The person added that UltraTech would fund the deal largely through loans and a little bit of equity. An announcement in this regard is expected in a fortnight.

Jaiprakash Associates declined comment.

UltraTech didn’t respond to an email seeking comment.

UltraTech Cement had earlier agreed to buy two cement assets in Madhya Pradesh with a combined capacity of 5 million tonnes from Jaiprakash Associates for Rs.5,400 crore. The stand-alone deal was put on hold, and the two assets folded into a larger transaction under which the latter is seeking to divest its entire cement capacity.

Lenders to the debt-laden Jaypee Group have been pushing for a sale of the conglomerate’s cement assets in a bid to reduce the group’s overall debt.

According to bankers involved in the deal, a significant portion of the enterprise value would involve transfer of the debt currently on Jaiprakash Associates’ books.

Regulatory issues, though, can hamper the deal.

Source: Mint