Nirma to buy Lafarge's India cement assets for Rs 9,300 crore Nirma on Monday confirmed that it has bought LarfargeHolicm's India assets for an enterprise value of USD 1.4 million (Rs 9300 crore plus) for 11 million tonne capacity. Nirma on Monday confirmed that it
has bought LarfargeHolcim's India assets for an enterprise value of USD 1.4 million (Rs 9300 crore plus) for 11 million tonne capacity. The valuation is higher than market expectations. The final three contenders were Piramal Group, JSW Group and Nirma. CNBC-TV18 in May had first reported that Nirma had joined the race to buy this asset.
Investment banker Anil Singhvi said LafargeHolcim has got a very good deal and expressed surprise at Nirma's aggressive price to outbid Piramal and JSW's pricing. He added that he was not too concerned with the fact that the Lafarge brand will no longer exist as Nirma too was a very wellknown household brand. "Nirma will do well," he said. He added that the deal was unlikely to set a new benchmark for the pricing of other cement deals in the offing -- even as action seems to have firmed up in the space following the recent Jaypee-UltraTech deal. "I do not see a change in the pricing scenario," said Singhvi. "This agreement is an important step in our 3.5 billion Swiss franc ($3.56 billion) divestment programme," LafargeHolcim Chief Executive Eric Olsen said in a statement. "With this deal, two-thirds of the programme has been secured and the remainder of the program is well on track.
We are confident that we will meet our target by the end of this year." The deal, the proceeds of which will be used to pay down LafargeHolcim's debt, is subject to approval by the Competition Commission of India. Below is the transcript of Anil Singhvi’s interview to Anuj Singhal, Nisha Poddar and Ekta Batra on CNBC-TV18. Anuj: Deal done, your first thoughts on the valuations at which the deal is being done. A: I think Lafarge has got a very sweet deal. USD 1.4 billion for almost a 10 million tonne capacity is a very good deal. So, I think Nirma has paid a very high valuation for larfarge’s assets. So, Lafarge should be very happy about it. Nisha: Of course, at higher valuations, but the assets also are far superior to the others, but the point that we were discussing earlier as well, what is it that you are looking at in terms of Nirma’s play in the entire cement industry now? How is it positioned? It is looking very aggressive and of course, it cannot use the brand value of that particular cement unit as well. So, what is it that comes to the table of Nirma and how is it positioned in the pecking order now in the cement industry?
A: You have raised 2-3 points and I will answer one by one. First of all, you are saying quality of these assets are far superior than Jaypee Cement assets. I beg to differ. Some of these assets are very old assets. As you will recollect, one of the assets was sold by Tata Steel, Jamshedpur facility, including grinding station. One was Raymond’s very old plant. So, Lafarge assets are really not very so to speak, up to the date assets. They are dated assets as compared to Jaypee’s assets. So, first and foremost is that. That is why I am saying Lafage has got a very sweet deal as compared to what Jaypee has got from UltraTech Cements. Second point is that Nirma as a very surprised play, Nirma has gone really very aggressive to bid for USD 1.4 billion for these assets. I am a bit surprised that this kind of aggression is there by Nirma. And you made a very valid point that Lafarge brand will not be available, but Nirma is a household brand, so I do not think they will suffer on account of not having known the brand purse in the market whether it is for detergent or for cement. It is a brand which has a very high record. So Nirma should be able to do a good job, plus they already have a presence in Rajasthan, so Rajasthan asset of Lafarge will definitely help them. And Nirma has been scouring for cement assets for a while. They wanted to buy some of the cement plants in Gujarat, then they were looking at some acquisitions in Rajasthan, but this is a big one. So, Nirma will now emerge as a very serious player in cement industry, they will be almost close to 13-14 million tonnes. So, it will get into a reckoning in the cement industry and I am very pleasantly surprised that Nirma has been able to out-bid JSW Cement and Piramal. This is something very amazing. (With inputs from Reuters) Tags Nirma LarfargeHolicm India assets JSW Group Piramal Group Ads by Google Buy, Hold, Sell ? Hear it first on M3 Nirma to buy Lafarges India cement assets for Rs 9,300 crore See all NEWS MOST POPULAR TOP NEWS S&P 500 brushes record high after blowout jobs report Support for Nifty at 8240; 8K Miles bullish play: Prakash Gaba Want to bet on high GDP growth? Buy these: Enam Here are some investment ideas from market experts I have a new 'secret' master plan, so stay tuned: Tesla's Musk See all VIDEO OF THE DAY Markets in 'goldilocks' zone but risks high
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