Shree Cement Ltd has agreed to buy a majority stake in the UAE-based Union Cement Company in its first takeover deal outside India.
The Indian cement maker will acquire a stake of at least 92.83% in Union Cement, it said in a stock-exchange filing.
The deal has been struck at an enterprise value of $305.24 million for 100% of Union Cement, it said.
The acquisition includes a net working capital of $59.37 million of UCC and helps increase the cement capacity from 29.3 MTPA to 33.3 MTPA for Shree Cement.
The company's scrip gained 0.19% to close at Rs 19,511 on Thursday in a positive Mumbai market.
Union Cement Company, which is listed on Abu Dhabi Stock Exchange (ADX), has an operating clinker capacity of 3.3 MTPA and cement capacity of 4 MTPA.
UCC owns 60% equity stake in UCC Norcem which is dealing in marketing of oil-well cement produced by it.
The transaction would be completed through subsidiaries of Shree Cement in the UAE.
UCC has reported revenues of $153 million in calendar year 2016, $174 million in 2015 and $149 million in 2014. It reported an EBITDA of $34 million in 2016, $40 million in 2015 and $34 million in 2014.
Baker Tilly DHC, Standard Chartered Bank and Freshfields Bruckhaus Deringer acted as advisers to Shree Cement.
Cementing deals
The cement sector saw a number of deals where some smaller players are getting absorbed by big peers or companies looking for scale and growth areas.
The consolidation activity also intensified after the government amended the Mines and Minerals (Development and Regulation) Act, 1957 to allow transfer of captive mining leases not granted through auction.
Last month, a distressed assets fund set up by Bain Capital and Piramal Enterprises Ltd joined hands with Dalmia Bharat Cement Ltd to bid for debt-laden Binani Cement.
In May, India’s Ambuja Cements Ltd was planning to merge with its subsidiary ACC Ltd to bring about operational efficiencies in a competitive market.
In 2016, LafargeHolcim Ltd sold Lafarge India Pvt. Ltd to Nirma Ltd for $1.4 billion (Rs 9,400 crore) including debt, in a deal that will complete the India leg of the global merger of French cement giant Lafarge and Swiss building materials group Holcim.
Other companies that have stuck large deals in the past include UltraTech Cement Ltd, Orient Cement Ltd and Birla Corp.