CRH eyes expansion into India in race to buy two Jaiprakash Associates plants
BUILDING materials group CRH is eyeing expansion in India and is in the race to buy two cement plants owned by Jaiprakash Associates, a source close to the deal said.
Ultratech Cement, India's No.1 cement maker and part of the diversified Aditya Birla Group, is also in talks to buy the plants, in Gujarat and Andhra Pradesh, in western and southern India, respectively, the source said.
Ultratech, which has annual capacity of 52 million tonnes, is interested in buying only the Gujarat plant, while CRH, which has a 50pc stake in another cement plant in Andhra Pradesh, is looking to buy both, the source said.
Delhi-based Jaiprakash, which has interests in cement, construction, real estate and hospitality, hopes to raise up to$1.6 billion from the sale to help pay down part of its $8 billion debt, said the source, who declined to be named.
CRH, Jaiprakash and Ultratech all declined to comment.
CRH's strong balance sheet and ambition to bulk out its Indian operations make it well positioned for further acquisitions.
The move to buy the two cement plants would triple its Indian capacity to nearly 14 million tonnes, Goldman Sachs analysts said.
Shares in Jaiprakash, valued at about $3bn, closed 0.3pc higher at 76.90 rupees, and CRH, valued at €11.2bn, was down 0.9pc at €15.31 this afternoon.
CRH's acquisition profile to date has been focused on smaller, bolt-on deals.
"For CRH, an acquisition of this nature could potentially make sense given its existing presence in Andhra Pradesh and its stated intention to expand in the country," said Robert Gardiner at Davy Stockbrokers.
"However, any deal would have to stack up financially and the rumoured purchase prices, at $160 per ton of cement, looks rich," he said.
European players such as French group Lafarge, Swiss company Holcim have also been linked to the asset sales in recent weeks, according to reports in India.