KKR, UltraTech submit bids for Jaypee Group’s cement assets

Byszheng

Updated Thu, 21 Jan 2016 17:16:54 GMT

KKR and Co. and billionaire Kumar Mangalam Birla’s UltraTech Cement Ltd have submitted initial bids for all the cement assets of Jaiprakash Associates Ltd, people with knowledge of the matter said.

JSW Cement Ltd, a unit of industrial conglomerate JSW Group, also submitted an offer earlier this month for the cement operations of heavily-indebted Jaiprakash, the people said, asking not to be identified as the information is private. The bidders have started due diligence, which could be completed by the end of February, according to the people.

Potential buyers have been asked to take on as much as Rs.20,000 crore of the cement business’s debt as part of the deal, the people said. Under the terms being discussed, Jaiprakash wouldn’t receive any cash proceeds from the sale, the people said.

Jaiprakash is selling assets to help reduce its debt, which more than doubled to Rs.75,300 crore in the five years through March 2015, according to data compiled by Bloomberg.

Any acquisition by Ultratech would help Birla’s conglomerate meet its target of increasing cement capacity to 100 million tonnes in a decade, a vision he outlined in November 2014.

Jaiprakash has an annual cement production capacity of about 21 million tonnes, including plants under construction, according to the people. The company aims to pick a winner by the end of March, the people said.

Representatives for Jaiprakash, KKR and UltraTech’s parent company, the Aditya Birla Group, declined to comment. “As of now, we are not contemplating any buyout plan” of Jaiprakash cement units, JSW Group said in an e-mailed statement.

A person directly involved in the negotiations said Jaiprakash’s valuation of its assets was too steep.

UltraTech is not keen to acquire all the cement assets because of quality issues although it has submitted bids for all, the person said on condition of anonymity.

“UltraTech is looking at a 60% discount to what Jaypee Group is quoting. UltraTech is keen to buy the entire cement assets only at cheaper valuations,” the person added.