India's Aditya Birla Group Eyes Holcim-Lafarge's Brazil, Philippines Assets

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Researched by Industrial Info Resources India (Delhi, India)---India's cement giant Aditya Birla Group (Mumbai) plans to acquire global assets that are likely to be carved out of the merger between cement giants Lafarge SA (EPA:LG) (Paris) and Holcim Limited (OTCMKTS: HCMLY) (Jona, Switzerland). UltraTech Cement Limited (BSE: 532538) (Mumbai) and other subsidiaries belonging to the $40-billion Aditya Birla Group have submitted the bid for cement units of Lafarge and Holcim in Brazil and Philippines. The total enterprise value of these units has been estimated at $1.4 billion.

Lafarge and Holcim have drawn up a list of assets they plan to sell worldwide that accounts for around $3.5 to 4.5 billion of annual sales. They plan to sell units with a combined enterprise valuation of about $6.3 billion.

Brazil was the preferred choice of the Birla group for growth three years ago and Philippines being among the overseas countries where the group started operations several years ago. Holcim and Lafarge South Africa unveiled a proposal to create the world's largest cement company on April 7, 2014.

Competition authorities in 15 countries as well as the European Commission are expected to scrutinize the deal which will create an entity with a combined stock market value of more than $55 billion.

The Birla group is competing with opponents including other cement companies and private equity players for these units. Germany's Heidelberg Cement AG (HEI: XETRA) (Heidelberg) has teamed up with Brazilian firm Votorantim Cimentos SA (NYSE:VEBM) (Sao Paulo), while Cemex SAB (NYSE: CX) (San Pedro Garza García) of Mexico has joined hands with Irish-firm CRH Plc (OTCMKTS: CRHCF) (Dublin). Eurocement Holding AG (2281109Z:) (Zurich), controlled by billionaire Filaret Galchev, is also in the race.

The Birla group's move is a part of its overall plan to increase cement capacities to 70 million tons per annum (MTPA) by early 2016 from 63 MTPA. The acquisition, if and when it materializes, will help the group to gain market share without having to build new plants. Aditya Birla Group has been expanding its global footprint post economic liberalization in 1991. The group concluded 36 acquisitions in 20 countries since Kumar Mangalam Birla came to the helm in 1995.

The group's cement company Ultratech acquired the cement unit of Jaypee Group last year. The acquisition, if and when it happens, may help the group to gain market share without having to build green field factories Aditya Birla Group has been expanding its global footprint post economic liberalization in 1991. The group concluded 36 acquisitions in 20 countries since Kumar Mangalam Birla came to the helm in 1995 after the untimely death of his father.

Over 50% of the Aditya Birla Group's revenues flow from its overseas operations. It is now present in several countries including, the US, China, Singapore, Russia, South Africa and Spain. It employs close to 50,000 people abroad. Ultratech is also looking for assets in places like Indonesia, Thailand, Malaysia and the Philippines. It has already presence in Sri Lanka, UAE and Bahrain.

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