12 September 2019: Puneet Dalmia-led Dalmia Cement (Bharat) has put in a bid to acquire the Rs 6,000-crore cement business of Emami.
Though Dalmia Group held initial talks with private equity funds such as CPPIB (Canada Pension Plan Investment Board) and Piramal-Bain for a joint bid, it has now decided to go solo and finance the acquisition internally, said three people with direct knowledge of the development.
“They have submitted the initial EoI (expression of interest) and are currently carrying out due diligence,” said one of the persons, who spoke on condition of anonymity.
Dalmia Group was founded in 1935 by Jaidayal Dalmia and its cement division was established in 1939. For the group, which has grown through a string of acquisitions, Emami’s assets would give it access to India’s eastern market. As per the company’s website, it has manufacturing plants in Tamil Nadu (Dalmiapuram and Ariyalur) and Andhra Pradesh (Kadapa), with a capacity of 9 million tonnes per annum.
“Dalmia Group initially held discussions with PE funds such as CPPIB and Piramal-Bain for a joint bid. However, they have decided to bid solo for this asset,” said an investment banker.
Last year, Dalmia Bharat had joined hands with Piramal-Bain to acquire the troubled Binani Cement during its bankruptcy proceedings. But it did not win the bid.
In response to ET’s queries, Dalmia Bharat spokesperson said, “Dalmia Bharat is currently studying the financials provided by the bankers of Emami Cement. The strategy will be decided once we conclude our assessment and firm up our intent to proceed. Moreover, we have a healthy leverage but would always keep all options open.”
An Emami spokesperson, however, said in an emailed response, “We decline to comment on market speculation.” For Emami Group, which is looking at deleveraging its business by selling non-core assets and concentrating on its core business, the cement assets can fetch Rs 6,000-7,000 crore. Emami promoters sold 10 per cent each in two tranches earlier this year to raise around Rs 2,800 crore – Rs 1,600 crore from stake sale in February and Rs 1,230 crore in June.
“The information memorandum were sent out a fortnight back on behalf of Emami Group and initial interest from prospective buyers has been received,” said another person involved in the process.
Founded in 1974 by RS Agarwal and RS Goenka, Emami Group owns businesses in sectors ranging from FMCG to healthcare, cement, newsprint and paperboard, biodiesel and edible oil, real estate, solar power, writing instruments and pharmaceuticals. The company, which received regulatory approval for an IPO of its cement business, has decided to junk that plan and go ahead with a full sale, said people aware of the matter.