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Cemex looking to acquire Murli Industries

World Cement,

Cemex is reported to be in negotiations to acquire a controlling stake in Murli Industries. If successful, this will be the Mexican company’s first entry into the Indian cement market. It seems that the deal has been on the table or several months and should be completed by the end of the year. A spokesperson for Murli Industries indicated that several international players had expressed interest in the company and negotiations were continuing.

The Economic Times said that Cemex had made an offer of US$550 million, but the price is still being negotiated and the final figure would depend on the outlook for cement prices. The investment banking unit of equity brokerage Motilal Oswaal is advising Murli Industries, along with Macquarie Capital, while Ba of America Merrill Lynch is advising Cemex.

Today, two players, Gujarat Ambuja, controlled by Holcim, and the Birla Group’s Ultra-Tech, control around 60% of the market, while a handful of mid-size players and scores of small players account for the rest. Lafarge has been in India since 1999, when it acquired the cement business of Tata Steel. It currently has four cement plants there with an annual production capacity of 6 million t. India’s cement sector continues to be ripe for further consolidation – and – expansion, as demand is expected to grow rapidly in an acceleration of infrastructure construction and real estate development

Murli Industries, which has a 3 million t plant in Maharashtra’s Chandrapur district, plans to build two more plants, one in Rajasthan and the other in Karnataka. The new units, with capacities of 3 million t each, would be built in tandem with 50 MW captive power plants. However the company has not yet ordered any equipment for these plants. It seems that once the deal has been completed, Murli Industries is expected to completely exit the cement business.

Earlier this year, Vicat acquired 51% of the 2.5 million tpa Bharathi Cement company in Andhra Pradesh, and Kohlberg Kravis Roberts invested US$170 million in an unlisted subsidiary of New Delhi-based Dalmia (Bharat) Cement.

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