The race to acquire Holcim’s India assets—Ambuja Cements and ACC—is gaining speed, with UltraTech Cement of the Aditya Birla group secured favourable legal opinion and is all set to bid for it. Worth mentioning here is that Asia’s richest person Gautam Adani-owned Adani Group and Sajjan Jindal’s JSW group jumped into the fray to gain control that would immediately strengthen their position in the cement market.
At 9.30 am on Wednesday, shares of Ambuja Cements opened in the green, at Rs 360.80 apiece on the BSE while the ACC scrip climbed to Rs 2,207 apiece.
Citing people familiar with the development, ET reported that the Aditya Birla Group is all set to divest voluntary assets of around 15 million tonnes per annum (MTPA) as a solution to comply with market share norms. India’s antitrust body—Competition Commission of India (CCI)—has given long form merger notifications in eight out of 16 cement deals since 2011. Of these eight, Aditya Birla Group company UltraTech alone had filed for five since 2013 with the CCI. It is important to mention in this context that under the Competition Act, mergers and acquisitions or combinations beyond a certain threshold need approval from the regulator.
Given the CCI’s track record, UltraTech was hopeful of getting the anti-trust regulator’s green signal, according to the legal sources close to the Birla Group.
CCI lawyers are of view that if companies can come up with viable solutions, approvals can come in as early as 30 working days. All five Aditya Birla Group cement deals have been okayed within the 30-working day period – also known as phase I approvals.
However, in phase II approvals, the regulator can take up to 210 calendar days from the time of receiving application to clear a proposal, if no remedial measures are provided.
“Birla will volunteer a remedial plan involving divesting asset for a quick phase I approval,” the financial daily quoted an official in the know as saying.
“Given the strong market presence of both parties coupled with the oligopolistic nature of the industry, the CCI will typically focus on the combined market shares of parties, the extent of barriers to entry in the market, and the position of their competitors in the market,” a head of competition practice of one of the full-service law firm involved in the matter told the publication on condition of anonymity.
He went on add that if after the said evaluation, the regulator believes that the deal will adversely impact the competition in the market, it can ask parties to provide “remedies (including divestitures) as a condition of approval.”
