JSW Cement In Talks To Acquire Heidelberg's Indian Operations
JSW Cement, the building material division of the JSW Group, is reportedly in discussions to acquire the Indian operations of German cement company Heidelberg Materials, which produces 13.4 million tonnes of cement annually, as reported by a media house.
Sources quoted by the media report indicate that JSW Cement initiated these discussions following an unsolicited offer by the JSW Group to acquire Heidelberg's local entities, primarily active in peninsular India.
The building materials sector in India, ranking as the world's second-largest cement market in terms of capacity and consumption, has a strong regional focus, relying heavily on transportation logistics. In the context of mergers and acquisitions within this industry, the valuation multiples linked to profitability often depend on the proximity of manufacturing facilities to the end-consumer market.
Recent reports suggest that another global cement manufacturer may be considering an exit from the Indian market, following Holcim Group's departure in 2022. The competitive bid for Ambuja Cements and ACC, previously owned by Holcim Group, was won by the Adani Group. It's worth noting that the JSW Group also participated in this competitive bidding process.
The future of Heidelberg's exit strategy in India remains uncertain. The company may choose to divest its assets through a competitive bidding process, potentially attracting a wider range of buyers and increasing competition for the plants.
Under the leadership of Sajjan Jindal, the JSW Group is actively working to make its cement and ports divisions profitable ventures, despite past challenges. While there have been significant advancements in port operations, industry experts remain uncertain about the future prospects of the cement subsidiary.
JSW Group had previously announced plans for an IPO for JSW Cement. According to earlier media reports, Parth Jindal, the Managing Director of JSW Cement, had indicated plans to list the cement business in FY20.
