INDIA BUSINESS WORLD - DECEMBER 1^st - DECEMBER 15^th - 2007

PORTUGUESE CEMENT MAJOR CIMPOR BUYS GRASIM'S 53% IN SHREE DIGVIJAY

CIMPOR, the Portuguese cement major, has agreed to buy Grasim Industries' 53.3% in Shree Digvijay Cement for about Rs 322 crore, gaining entry into the world's second-largest cement market, reports Our Bureau from Mumbai. Cimpor, or Cementos de Portugal, the world's ninth-biggest cement producer, will pay Rs 42.5 per share to Grasim and will make an open offer for 20% more to Digvijay's public shareholders. Grasim purchased Shree Digvijay in 1998. The firm had 1.07 million tonnes of capacity and a jetty in Gujarat. The acquisition ran into trouble quickly and Grasim was unable to increase the firm's capacity to capitalise on opportunities. Shree Digvijay continued to make losses, became sick and was referred to the Board for Industrial and Financial Reconstruction. Grasim, after the acquisition of Larsen & Toubro's cement business, which gave it a capacity of 6 mt in Gujarat, decided to sell its stake in the company. Standard Chartered advised Cimpor on the deal while ABN AMRO acted on Grasim's behalf. The deal is expected to be completed by March. Cimpor is the latest foreign firm to enter India's booming cement market. But foreign firms, with the exception of Holcim, have been unable to grow. France's Lafarge is largely a regional player and so is Italcementi, which bought out Zuari's cement business.