Shree Cement is in non-binding talks to acquire between 40% and 72% stake in Sanghi Cement for an enterprise value (EV) of Rs 6,000 crore, according to multiple sources briefed on the matter.
Indicative commercial terms have been shared. The talks are not exclusive and other parties could also be simultaneously discussing a deal, according to the sources.
Commercial terms could vary depending on the outcome of due diligence. The talks could end up being inconclusive. The EV of Rs 6,000 crore includes debt of Rs 1,800 crore. This places the equity value being discussed at Rs 4,200 crore. At this valuation, Shree Cement could fork out between Rs 1,680 crore and Rs 3,024 crore for the quantum of equity stake being discussed if a deal were to work out, not including the cost of an open offer.
In the past, rivals such as UltraTech, Dalmia Bharat and JSW Cement are also said to have engaged in informal discussions for a potential acquisition but no deal took place, well placed industry sources said.
Shree Cement declined to comment. Sanghi Cement’s director Alok Sanghi did not respond to emailed queries, phone calls and text messages.