Aditya Birla Group has evinced interest in acquiring Jaypee Cement Corporation’s five million tonne per annum (mtpa) Gujarat facility and a deal is likely to happen in 10-15 days.
A source in the know of the development said that while Aditya Birla Group is keen on buying Jaypee Cement’s Gujarat plant, the latter wants the Mumbai-based conglomerate take up to 49 percent stake in the entire firm, which also has a 4.8 mtpa cement making facility in Andhra Pradesh.
“Talks are on at advanced stages and the deal is likely to happen in the next 10-15 days. However, it has to be seen whether the deal is confined only to the Gujarat facility or spreads to Andhra Pradesh as well,” the source said. The Jaypee Group, having interests in areas such as real estate, cement and hospitality, is the country’s third largest cement maker with an installed capacity of 33.5 mtpa.
Jaiprakash Associates, the flagship company of the Group, holds the majority of the cement business. However, operations in Gujarat and Andhra Pradesh, having a total capacity of 9.8 mtpa, are under the aegis of Jaypee Cement, which was recently hived off for monetising the asset.
Besides Aditya Birla Group, the country’s largest cement maker with 52 mtpa capacity, French major Lafarge has also evinced interests to forge a deal with Jaypee Cement. But Jaypee Cement is believed to be inclined towards the Birla group for a couple of reasons, market sources said, including the fact that the two have already transacted once in the acquisition of Bina Power Supply (BPSL).
In 2008, a group company of Jaiprakash Associates had acquired BPCL from the Aditya Birla Group. “As the two know each other and have transacted once, it is easier for Jaypee to ink a deal with the Aditya Birla Group than with a foreign company,” the source said, adding the two are now engaged in direct talks and have not involved any merchant banker for transaction.
A senior Jaypee Cement Corporation had recently said that the company plans to raise some funds by diluting a minority stake and was mulling a couple of options, which include roping in a private equity firm as well. The proceeds would be used to meet capacity expansion and retire debt, among others. Jaypee Group is working on increasing its cement capacity to 36 mtpa by the end of the current fiscal and is evaluating various locations to take it to 50 mtpa capacity over the next five years.