Holcim enters into a strategic alliance with Gujarat Ambuja Cements to enter the growth market of India; makes a public purchase offer to the shareholders of The Associated Cement Companies and Ambuja Cement Eastern. Holcim has been evaluating various ways of entering the Indian market for some time. The Board of Directors and Executive Committee have now decided to secure a foothold in the subcontinent by means of a long-term strategic alliance with a strong local partner, Gujarat Ambuja Cements Ltd (GACL). Under the alliance, the two partners aim to realise value-creating projects in India and jointly participate in the Indian cement industry's dynamic market growth. Fundamental to this alliance is the technical cooperation between a global Group which already has a strong presence in Asia and a local partner with outstanding manufacturing expertise, brand, and market presence in India. In addition to the exchange of experience in all areas of cement manufacturing, marketing, and exchange of managerial and technical talent, the partners also aim to strengthen their clinker and cement trading activities in South Asia, the Middle East and the region adjoining the Indian Ocean. In the future, Holcim also intends to use India as an additional base for its IT operations, R&D projects, as well as a procurement sourcing hub to generate additional synergies and value for the Group.
Ambuja Cement India Ltd makes public purchase bid to increase its shareholdings in The Associated Cement Companies Ltd and Ambuja Cement Eastern Ltd Ambuja Cement India Ltd (ACIL) will be the alliance vehicle. Holcim has entered into an agreement with private investors (AIG/GIC) to acquire a 40 percent stake in ACIL, and has simultaneously entered into a Share Subscription Agreement with ACIL which will allow Holcim to raise its participation to 67 percent in ACIL.
In line with the objectives of the strategic alliance between GACL and Holcim, ACIL has announced a public purchase offer to acquire a majority shareholding in The Associated Cement Companies Ltd (ACC). ACIL already owns a 13.8 percent holding of ACC, India's second-largest cement producer. Through ACIL, Holcim is offering ACC shareholders Rs 370 per share with the objective of increasing its shareholding up to 50.01 percent. The tender offer is subject to the approvals by the relevant government authorities in India.
ACIL also owns 94 percent of Ambuja Cement Eastern Ltd (ACEL), which is one of the most profitable cement manufacturers in India. Concurrently, ACIL is also making an offer to the minority shareholders of ACEL at Rs 70 per share, subject to the relevant approvals.
The transactions are expected to be concluded by April 2005 with Holcim expected to invest a total of approximately USD 800 million which will be financed entirely through internal resources and existing credit facilities. Holcim firmly believes that the strategic alliance with GACL will be of significant advantage to both partners, particularly since GACL ranks among India's leading cement producers and Holcim is one of the global cement market leaders. Holcim's decision to enter the Indian market represents another major milestone for India's cement industry and is also in line with the government's declared objective of developing an efficient and internationally competitive cement industry.
About The Associated Cement Companies (ACC) ACC is the most experienced and second-largest cement producer in India. It has 12 cement plants and three grinding plants with a current total capacity of 18.2 million tonnes a year, and a national market share of around 13 percent. ACC is the only pan-Indian cement company operating also in other construction materials. It has 11 ready-mix concrete facilities located in important consumption centers in India. ACC also operates a concrete research laboratory and manages cement plants and projects in Saudi Arabia and Africa. In fiscal 2003-04 ACC reported net sales equivalent to USD 776 million, an operating profit of USD 52 million and a net profit after minority interests of USD 48 million. Further information can be found at www.acclimited.com.
About Ambuja Cement Eastern (ACEL) ACEL owns a cement plant and a grinding plant with a combined annual cement capacity of 2.0 million tonnes. In fiscal 2003-04 the company reported an operating profit of USD 16 million and a net profit of USD 10 million on net sales of USD 90 million. India is the second most populated country in the world. It is a huge emerging market with immense potential, particularly in the industrial and services sector. The country's economic prospects are bright, and this is reflected in the 6 to 7 percent economic growth that has been predicted for the next few years. The population and housing boom and a rapid expansion of the country's infrastructure are bolstering the construction sector. Per capita cement consumption is currently in the region of 115 kilogrammes a year - one of the lowest consumptions in Asia. Compared with gross national product, however, cement consumption has risen at a disproportionate rate over recent years and looks set to continue to do so going forward. As a result, the industry will have to expand its capacity substantially over the next decade. Cement consumption in 2004 is likely to reach 120 million tonnes and is expected to grow by 7 to 8 percent in the next years. This makes India the world's second-biggest cement market after China. The Indian market leader is Grasim-Ultratech (annual capacity of around 33 million tonnes of cement), followed by ACC in second place (annual capacity of 18.2 million tonnes of cement) and GACL (annual capacity of 12.5 million tonnes of cement) in third place.
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Gujarat Ambuja Cements Ltd is the third-largest cement producer in India. The Group owns six cement plants, three grinding plants and three cement terminals (one in Sri Lanka). Operations are centered mainly in Northern and Western India. Further information can be found at www.gujaratambuja.com. * * * * * * * Holcim is one of the world's leading suppliers of cement, aggregates (gravel and sand), concrete and construction-related services. The Group holds majority and minority interests in more than 70 countries on all continents.
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Additionally, Holcim Ltd announces in a separate media release a recommended offer to the shareholders of Aggregate Industries plc.
Unless otherwise determined by Holcim, the Offer (including the Loan Note Alternative) will not be made, directly or indirectly, in or into, or by use of the mails or any means or instrumentality (including, without limitation, facsimile transmission, telephone and internet) or interstate or foreign commerce of, or any facilities of a national securities exchange of, the United States, Australia, Canada or Japan. The Offer (including the Loan Note Alternative) will not be capable of acceptance from or within any of these jurisdictions or by use of any means, instrumentality or facilities. Accordingly, copies of this media release are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from any of the United States, Australia, Canada or Japan and persons receiving this press release (including custodians, nominees and trustees) must not mail or otherwise distribute or send it in, into or from such jurisdictions.