Deal likely soon at $200/tonne, or for about $500 million.
SA des Ciments Vicat, a French cement major, is in advanced buyout discussions with Bharathi Cement of Hyderabad.
An investment banking source said a deal, to be priced around $200 per tonne, is likely to be sealed in the next few weeks. At Bharathi’s current capacity of 2.5 million tonnes, the deal could cost $500 million.
The promoters of another Hyderabad-based cement company, which already is an ally of Vicat, is said to be mediating the deal.
Bharathi and Vicat could not be reached for comments.
Bharathi is promoted by Y S Jagan Mohan Reddy, a Member of Parliament from Kadapa and son of former Andhra Pradesh chief minister Y S Rajasekhara Reddy.
Dalmia Cement, India Cement and N Prasad, vice-chairman and founder of Matrix Laboratories, also have stake in the company.
Jagan Mohan Reddy has invested in Bharathi through his company Sakshi and owns about 69%.
Bharathi’s plant is at Nallalingayapalli village in Kadapa. The company has a long-term blueprint to set up five million tonnes’ capacity .
In the first phase it has commissioned a capacity of 2.5 million tonnes through an investment of Rs 700 crore.
The company expects to touch 5 million tonnes capacity in the third quarter. The project will cost Rs 1,420 crore.
Bharathi has a target of achieving Rs 900 revenues this fiscal and Rs 1,640 crore by next.
Bharathi focuses mostly on Andhra Pradesh, Tamil Nadu, Karnataka, Kerala, Goa and Maharashtra markets.
“The company is definitely talking to foreign partners either for exploring new initiatives or for stake sale. There are no details available on this at this point,” a source in the company said.
The talk of Bharathi looking for stake sale has been in the air for some time now.
Vicat has an installed capacity of about 21 million tonnes globally. It manufactures and sells cements, ready-mix concrete, aggregates and concrete pipes as well as stucco and mortar for use in building construction internationally.
The company also produces a variety of papers, medium-to-large capacity paper bags and chemicals, and provides freight transportation services.
While it has a market cap of about €2.57 billion, for 2009 it had €1.89 billion in revenues and a profit of just €0.19 billion.
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