Ambuja gets shareholders’ approval to buy stake in Holcim

A file photo of a Holcim plant. According to the capital markets regulator’s new rules on mergers and acquisitions, listed entities need the support of a majority of minority shareholders. Photo: Bloomberg

Mumbai: Ambuja Cements Ltd on Sunday announced that it had received shareholders’ approval at its extraordinary general meeting (EGM) held on 23 November to buy a 24% stake in Holcim (India) Pvt. Ltd from Holderind International for Rs.3,500 crore, and the amalgamation of Holcim (India) with it.

Ninety per cent of shareholders voted in favour of Ambuja Cements buying a 24% stake in Holderind International for Rs.25.63 a share, Ambuja Cements said in a statement. “Essentially, most of the hurdles are cleared for the Ambuja Cements deal. Now, the deal only requires go-ahead from the high courts of Delhi and Gujarat and clearance from cabinet committee on economic affairs,” a person close to the development said, requesting anonymity.

On 19 November, in a postal ballot voting process for approving the scheme of amalgamation between Holcim (India) Pvt. Ltd and Ambuja, the company had secured shareholders’ approval, with 68.53% of minority shareholders voting in its favour.

With this, Swiss cement maker Holcim Ltd has cleared the two hurdles of voting in the proposed restructuring of its Indian subsidiaries, Ambuja Cements and ACC Ltd, by securing a majority of the postal votes from Ambuja’s minority shareholders.

“Green signals from the government and high courts are just a formality after securing requisite majority from shareholders,” the person quoted earlier said.

The restructuring has been criticized by some investors and local shareholder advisory firms for favouring the parent.

At the EGM, where the Ambuja Cements’ board had proposed a special resolution for reduction in share capital because of the cancellation of Ambuja’s shares held by Holcim (India) after the merger, the promoters could also vote. In a postal ballot voting process, promoters were not allowed to vote.

This is the first instance of India’s capital markets regulator’s new norms on mergers and acquisitions coming into effect. According to the new norms, listed entities need the support of a majority of minority shareholders for mergers and acquisitions. The controlling stakeholders do not vote.

On 25 July, Holcim decided to restructure its India operations to get Ambuja Cements and ACC to work better together, saving around Rs.900 crore.

In a complex deal, Holcim planned to raise its stake in Ambuja Cements to 61.39% from just over 50%. Once the deal is completed, Ambuja will hold a 50.01% stake in ACC.

After the announcement, many brokerages downgraded the Ambuja Cements stock. Proxy advisory firms, too, advised investors to vote against the restructuring proposal.

The deal also came under the scanner of markets regulator Securities and Exchange Board of India (Sebi), which asked Ambuja Cements to seek shareholders’ nod for both the transactions separately.

 

AMITKUMAR SINGH

 

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