Board of Directors of Heidelberg Cement Bangladesh Ltd has approved the 100 percent acquisition of Emirates Cement Bangladesh and Emirates Power Company from UltraTech Cement Middle East Investments Ltd. at a cost of nearly Tk 183 crore ($21.59 million).
The Heidelberg Cement inked an agreement on Wednesday for the transaction with UltraTech Cement Middle East Investments. Based in the United Arab Emirates, UltraTech Cement Middle East Investments is a wholly-owned subsidiary of Aditya Birla-led UltraTech Cement.
Market competition among too many producers has forced Emirates Cement Bangladesh to sell its entire stakes in Bangladesh to Heidelberg Cement.
Emirates Cement Bangladesh and Emirates Power Company are private company limited by shares incorporated in Bangladesh. Emirates Cement is engaged in cement production and Emirates Power in generating and supplying electricity.
Ultratech had entered into the Bangladesh market following India’s Aditya Birla Group’s acquisition of Dubai-based ETA Star Cement in 2010 at a price of $380 million, giving it direct access to markets in the Middle East and Bangladesh. The cement maker incurred losses in five years since the commencement of production in 2011 and made profits in the remaining years. At the end of fiscal 2018-19, its reserve and surplus stood Tk 56.69 crore in the negative.
The amount of consideration payable at closing shall be the BDT equivalent of US$ 21,518,684.56, which is approximately Tk 1,825,860,384.92 as at the date of this announcement, according to the disclosure.
There may also be a post-closing adjustment to the consideration pursuant to a post-closing audit. The transaction is subject to completion of the necessary regulatory formalities and approvals in compliance with the laws of Bangladesh.
Each share of the Heidelberg Cement, which was listed in Dhaka bourse in 1989, closed at Tk 174.20 on Wednesday, soaring 3.14 percent.
The company’s paid-up capital is Tk 565.04 million and authorised capital is Tk 1.0 billion while total number of securities is 56.50 million.
The sponsor-director own 60.67 percent stake in the company, while the institutional investors own 25.92 percent, foreign investors 1.15 percent and the general public 12.26 percent as on September 30, 2019.
The Germany-based multinational building materials company disbursed 75 percent cash dividend for the year ended on December 31, 2018.
Bangladesh has the capacity to produce 60 million tonnes of cement, exceeding a market demand of 35 million tonnes, according to industry insiders.
Of the total, Heidelberg’s yearly cement production capacity is 2.37 million tonnes, according to the company’s 2018 annual report. On the other hand, Ultratech’s Bangladesh plant has an annual capacity of 0.5 million tonnes.
Of the 75 cement manufacturers in Bangladesh, around three dozens are actively making cement.