- 18 Dec 2024
- ICICI Securities
AMBUJA CEMENT ANNOUNCES MERGER OF PENNA CEMENT & SANGHI INDUSTRIES WITH ITSELF
News: Ambuja Cement announces merger of Penna Cement & Sanghi Industries with Ambuja Cement. For every 100 equity shares of Sanghi Industries, Ambuja Cement will issue 12 equity shares to eligible shareholders of Sanghi Industries. Sanghi Industries has cement capacity of 6.1 mtpa (clinker capacity of 6.6 mtpa), whereas Penna has cement capacity of 10 mtpa along with 4 mtpa under construction. The transaction is expected to be completed within 8-12 months.
Views: The merger is the positive development for Ambuja Cement, since it integrates the operations of Penna Cement & Sanghi Industries with itself leading to reduced overheads, economies of scale benefit, streamline compliance requirement & better resource utilization. This arrangement would be positive for Ambuja Cement since it is merging Sanghi Industries at lower valuation (11% discount to CMP of Sanghi Industries). In relation to the arrangement with Penna Cement (unlisted), Ambuja Cement would pay Rs 321.50 for every share held by shareholders in Penna Cement.
Impact: Positive