Ambuja attempts to skirt open offer for ACC - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Ambuja attempts to skirt open offer for ACC

Mar 23, 2000

Gujarat Ambuja Cements Limited has sold a 40% stake in Ambuja Cement India (ACI), a subsidiary, to foreign institutional investors for a consideration of Rs 3.7 bn. The move is aimed at skirting the possibility of having to make an open offer for Associated Cement Companies (ACC). Read interview with Mr TMM Nambiar, MD, ACC GACL is the largest manufacturer of cement in Gujarat and Punjab. It is India's most efficient cement manufacturer due to high degree of mechanisation in its products and mining activities. It has controlled freight costs by moving bulk of its production through the sea route.

Under the new structure, the company’s holding in ACC and Ambuja Cement Eastern (a 1.5 million tonne cement plant) will be transferred to ACI. ACI has also drawn up plans to set up two cement plants of 2 million tonnes each at a cost of Rs 6 bn. ACI plans to go public, after which GACL’s holding in the company will stand diluted at 42%.

The sole purpose of the move is to prove to Sebi that GACL has not taken over the management of ACC. If the Sebi were to hold this view, GACL would have to make an open offer for an additional 20% stake in ACC at a price of Rs 370 per share (market price is currently Rs 130 per share). The 20% stake would cost the company Rs 12 bn.

A key benefit for GACL from this move would be a decline in the level of debt that it had initially taken to acquire the AC stake. Even if the Sebi were to rule that an open offer needs to be made, the entire burden would fall on ACI, thus insulating GACL from the possibility of a hike in debt burden. Therefore, GACL could continue to cooperate of pricing issues in various markets even as the fear of launching a takeover is diluted.

Market View:
The fact that GACL is India's most efficient producer of cement has led the analyst to rate the stock as a 'BUY'. The management quality of the company is considered to be another factor in favour of the company.


Equitymaster requests your view! Post a comment on "Ambuja attempts to skirt open offer for ACC". Click here!

  

More Views on News

AMBUJA CEMENT Announces Quarterly Results (4QFY20); Net Profit Up 7.0% (Quarterly Result Update)

Apr 29, 2020 | Updated on Apr 29, 2020

For the quarter ended March 2020, AMBUJA CEMENT has posted a net profit of Rs 7 bn (up 7.0% YoY). Sales on the other hand came in at Rs 62 bn (down 8.5% YoY). Read on for a complete analysis of AMBUJA CEMENT's quarterly results.

AMBUJA CEMENT Announces Quarterly Results (2QFY20); Net Profit Up 34.6% (Quarterly Result Update)

Oct 23, 2019 | Updated on Oct 23, 2019

For the quarter ended September 2019, AMBUJA CEMENT has posted a net profit of Rs 5 bn (up 34.6% YoY). Sales on the other hand came in at Rs 61 bn (up 1.0% YoY). Read on for a complete analysis of AMBUJA CEMENT's quarterly results.

AMBUJA CEMENT 2017-18 Annual Report Analysis (Annual Result Update)

Apr 8, 2019 | Updated on Apr 8, 2019

Here's an analysis of the annual report of AMBUJA CEMENT for 2017-18. It includes a full income statement, balance sheet and cash flow analysis of AMBUJA CEMENT. Also includes updates on the valuation of AMBUJA CEMENT.

AMBUJA CEMENT 2016-17 Annual Report Analysis (Annual Result Update)

Dec 18, 2018 | Updated on Dec 18, 2018

Here's an analysis of the annual report of AMBUJA CEMENT for 2016-17. It includes a full income statement, balance sheet and cash flow analysis of AMBUJA CEMENT. Also includes updates on the valuation of AMBUJA CEMENT.

More Views on News

Most Popular

How the 8-Year Cycle Can Help Identify Multibaggers (Fast Profits Daily)

Sep 11, 2020

This is how you can apply the greed and fear cycle in the market to pick stocks.

I Recommended this Stock over Page Industries because it's Relevant to Doubling Your Income (Profit Hunter)

Sep 7, 2020

Things are not often what they seem in the market and how you can take advantage of this.

The NASDAQ Whale Could Harm Your Portfolio (Fast Profits Daily)

Sep 7, 2020

The discovery of Softbank pushing up prices on the NASDAQ will cause volatility in the market. Stay alert!

This Could Be the Best September for Auto Stocks (Profit Hunter)

Sep 11, 2020

Here's why I think this month could be a great for auto stocks.

More

Covid-19 Proof
Multibagger Stocks

Covid19 Proof Multibaggers
Get this special report, authored by Equitymaster's top analysts now!
We will never sell or rent your email id.
Please read our Terms

AMBUJA CEMENT SHARE PRICE


Sep 18, 2020 (Close)

TRACK AMBUJA CEMENT

  • Track your investment in AMBUJA CEMENT with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

AMBUJA CEMENT - CHINA NAT. BLDG. COMPARISON

COMPARE AMBUJA CEMENT WITH

MARKET STATS