Sagar Cements is all set to buy cement business of Bangalore-based BMM Ispat Group.
The deal, with an enterprise value of about ₹500 crore, is likely to be sealed in a couple of weeks, according to sources in the know.
The annual general meeting of Sagar Cements scheduled to be held on September 24 is expected to take up the transaction.
The valuation per tonne could be around $80-$85. Once the deal is closed, Sagar’s capacity would go up from 2.75 million tonnes to 3.75 million tonnes as BMM has a one-million-tonne cement manufacturing unit at Tadipatri in Anantapur district of Andhra Pradesh.
The acquisition would benefit Sagar as it would provide easy access to southern markets and significantly reduce freight charges by over 40 per cent.
Further, it also has a captive power plant of 25 MW.
If the enterprise value is pegged at ₹500 crore, the equity payment would be about ₹100 crore as BMM has ₹250 crore debt and an unsecured loan of ₹150 crore.
Sagar Cements plans to pay for the acquisition in cash as well as in the form of its shares.
“A part of the payment could also be withheld to be paid only after 12 months from the date of closure agreement,’’ said a source, adding that barring any `last minute’ surprises, the deal was almost clinched.
Sagar Cements had recently exited from a joint venture with French Cement major Vicat group by selling its 47 per cent stake to the latter for ₹435 crore.
It had also indicated that it was interested in inorganic growth and scouting for acquisitions.
Its scrip gained 4.98 per cent on the Bombay Stock Exchange on Thursday to close at ₹367.65.
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