SINGAPORE Nov 16 UltraTech Cement (ULTC.BO), a unit of Indian conglomerate Aditya Birla Group, is absorbing sister unit Samruddhi Cement, to form the country's biggest cement firm, both companies said. The move, flagged in October, was approved by the boards of both companies on Sunday. The combined entity will be better placed to take on Swiss firm Holcim HOLN.VX, which controls about a fifth of India's 200-million tonne cement market through ACC (ACC.BO) and Ambuja Cements (ABUJ.BO).
"The merger will achieve the group's objective of consolidating its cement business into a single entity, thereby creating a platform that will help in pursuing aggressive growth going forward," Kumar Mangalam Birla, chairman of Aditya Birla Group, said in a statement on Sunday.
In October, the group said it will hive off the cement business of flagship firm Grasim Industries (GRAS.BO) into unit Samruddhi in a cashless transaction and later merge it with group firm UltraTech. [ID:nBOM163083]
India's cement market has seen demand revive in the last few months on resilience in rural consumption and higher spending on roads and infrastructure projects.
Aditya Birla Group's enlarged cement unit said it will have a production capacity of 48.8 million tonnes and become the world's 10th largest cement firm.
Samruddhi shareholders will receive four shares of UltraTech for every seven held in Samruddhi. UltraTech will also issue 149.5 million new shares, boosting its capital to 2.74 billion Indian rupees ($59 million).
For the company statement, click: r.reuters.com/tyt69f ($1=46.18 Indian Rupee) (Reporting by Anshuman Daga; Editing by Lincoln Feast)