NEW DELHI UltraTech Cement Ltd, part of the Aditya Birla conglomerate, has agreed to buy Jaiprakash Associates Ltd's cement plants for an enterprise value of 165 billion rupees ($2.4 billion), the companies said on Sunday.
UltraTech, beating competition from domestic and international bidders for the assets, and Jaiprakash said they had signed a memorandum of understanding for 12 plants whose capacity totals 22.4 million tonnes a year.
Jaiprakash said the agreement included a grinding unit currently being constructed, and that it would receive an additional 4.7 billion rupees to complete the facility.
The agreement will increase India's biggest cement maker's installed annual capacity by one-third to 90.7 million tonnes, and provide infrastructure firm Jaiprakash with much-needed relief to pare its debts.
Other companies who were interested in Jaiprakash's plants included Irish building materials group CRH and Dalmia Cement, sources told Reuters this month.
Atul Daga, UltraTech's chief financial officer, said that Sunday's pact includes the sale of two plants in central India that were part of an earlier agreement. UltraTech said on Friday it had scrapped that deal because it fell foul of regulations restricting the transfer of mining rights.
Under the new agreement, UltraTech will buy Jaiprakash's broader cement business, allowing the transfer of limestone reserves - a major raw material for cement - along with the plants, Daga told Reuters.
Jaiprakash, which has interests in roads, property and is best-known as the builder of India's Formula One racing track, has been trying to sell its cement business to reduce debt and placate its banks.
In a statement, Jaiprakash said it "has taken these steps to effectively address the subject of debt reduction".
Credit Suisse said in a note this month that Jaiprakash, which it said had debts of 753 billion rupees at the end of the 2015 financial year, had failed to earn enough to cover its interest payments for 11 consecutive quarters.
UltraTech and Jaiprakash said the transaction was subject to definitive agreements and regulatory approvals.
($1 = 68.7273 Indian rupees)
(Reporting by Tommy Wilkes; Editing by Richard Borsuk)
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