Nirma cements $1.4-bn Lafarge India buyout.

Nirma, the Ahmedabad-based detergent and soap maker, recently announced its acquisition of Lafarge India’s 11-million-tonne (mt) cement business for $1.4 billion (about Rs. 9,478 crore), including debt.

The valuation is around $127 per tonne, lesser than the $151 per tonne valuation Lafarge commanded in its aborted deal with Birla Corp last year and marginally higher than what UltraTech Cement paid to acquire Jaiprakash Associates’ assets last week.

The company, set up by Karsanbhai Khodidas Patel (71), emerged the most aggressive bidder, leaving Ajay Piramal’s Piramal Enterprises and Sajjan Jindal’s JSW Cement far behind, bankers said. Nirma already has a 2.28-mt capacity cement plant in Rajasthan that it commissioned in November 2014 after investing Rs 1,300 crore.

“The Patels of Nirma were aggressive to get into a market that is set for growth over the long term,” said a banker familiar with the development.

In a statement, Nirma said it will fund the deal through equal proportion of equity and target-level financing. The proposed deal was in line with the group’s strategy to pursue organic and inorganic business expansion to develop strong operations across diversified business verticals. “The proposed transaction is effectively an extension of the ‘market and product expansion’ strategy,” Nirma said.

“This acquisition is a transformational step for the group’s cement business. With a strong platform like Lafarge’s India business, we plan to take the cement business to the next level,” said Hiren Patel, managing director, Nirma.

According to investment bankers, Nirma will sell bonds worth about Rs. 4,000 crore ($596 million) to fund the acquisition. It reported a consolidated net income of Rs. 760 crore for the year ended March 2016 and net sales of Rs. 7,240 crore, according to ratings agency CRISIL.

BS