UltraTech Cement shares hit a 52-week high at the Bombay Stock Exchange (BSE), while the Jaiprakash Associates (JP Associates) scrip gained 30 percent on Tuesday after the companies announced the revised terms of the cement deal on Monday.
UltraTech Cement shares were trading at Rs. 3,3396 apiece at around 11.05 a.m. after hitting a high of Rs. 3,600 in early trade, while the JP Associates stock rose 38 percent to Rs. 12.50 in the morning and was trading at Rs. 11.74, up 29.30 percent.
In a regulatory filing to the BSE on Monday, UltraTech Cement said the company will be acquiring the cement plants of JP Associates and its subsidiary Jaypee Cement Corporation Ltd. for an enterprise value of Rs. 16,189 crore, up from Rs. 15,900 crore agreed upon in March this year.
The combined capacity of the cement plants spread over five states is 21.2 million tonnes per annum (mtpa). The acquisition will catapult UltraTech Cement's total capacity to 91.1 mtpa, including its overseas cement manufacturing units.
The deal is seen as a positive by brokerage Edelweiss Securities Limited for UltraTech Cement.
"...amost all JPA plants complement UTCL and to that extent the acquisition is akin to acquiring new markets rather than plain-vanilla assets and the deal has a concession from bank of 5 year principal moratorium," the brokerage said in a note on Tuesday.
However, it added that the renegotiation of the deal showed the Aditya Birla Group in a weak bargaining position.
"The acquisition is subject to the approval of shareholders and creditors, sanction of the Scheme of Arrangement by the Bombay High Court and the Allahabad High Court, approval of the Competition Commission of India and all other statutory approvals and is expected to take about 12 months to be consummated," UltraTech Cement said in a regulatory filing to the BSE on Monday after trading hours.
JP Associates to have lower cement capacity
The transaction will reduce the production capacity of JP Associates. "Post this deal, Jaypee Group will retain an aggregate cement manufacturing capacity of 10.6 MTPA with plants spread in Madhya Pradesh, UP, Andhra Pradesh and Karnataka," Manoj Gaur, executive chairman, Jaypee Group, told CNBC-TV18.