ULTRATECH’S ACQUISITION OF Deepak Badlani

Rohit Bandiwadekar

JAYPEE’S CEMENT ASSETS Nikunj Kedia

Raj Vora
 INTRODUCTION
In 2016, UltraTech announced its agreement to acquire plants of Jaiprakash
Associate business Jaypee Cement having 21.2 MTPA capacity for ₹16,189
crores
The deal encompasses 6 integrated cement factories and 5 grinding units
It will increase UltraTech’s capacity to 91.1 MTPA making it the fourth largest
cement maker in the world (Chinese firms excluded)
The merger was announced on 28th Feb 2016
The merger was finally concluded in June, 2017
 RATIONALE FOR MERGER
Acquirer: UltraTech Cements Ltd.
Increase capacity by nearly one-third to 92.3 MTPA
Geographical market expansion : Access to markets in Central India where UT does
not have any presence and improve market share in northern and southern zones
where it requires greater reinforcement
Target: Jaiprakash Associates Ltd.
Utilise the proceeds of the sale of its cement assets fully for the repayment of its
humungous debt
All the cement companies and divisions of JP group were in losses eroding the net
worth of the company making it a penny stock at ₹6.73/share
JP has decided to focus on its core business areas of engineering & construction, real
estate and project execution
 STOCK MARKET REACTION
Ultratech Cement
3050.00
3000.00
2950.00
2900.00
2850.00
2800.00
2750.00
2700.00
2650.00
2600.00

Jaiprakash Associates
8.2
8
7.8
7.6
7.4
7.2
7
6.8
6.6
6.4
6.2
6
SIMILAR DEALS IN CEMENT SECTOR
VALUATION : DCF & RELATIVE APPROACHES
 LEGAL ISSUES
Issue: Subsequent to the deal, the court has passed a judgement that
substantial acreage of limestone bearing land linked to JP’s UP cement assets
has to be returned to the state as it is a part of forest land
In may 2016, Rajya Sabha amended the Mines and Minerals (Development
and Regulation) Act (MMDR), 1957 to allow transfer of captive mine leases
which have not been granted through auction provided mineral from such
mining lease is being used for captive purpose
In March, 2016, Jaiprakash Associates received the National Company Law
Tribunal (NCLT)’s approval for transfer of its cement plants to UltraTech
Cement. The deal also received the Competition Commission of India (CCI)’s
approval in August, 2016 and shareholders’ nod in October, 2016.
THANK YOU