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Merger of Samruddhi with Ultratech Cement

UltraTech Cement - Merger of Samruddhi with Ultratech—sequel to restructuring plan. The Boards of Ultratech (UTCEM) and Samruddhi have approved the merger of the two entities that will result in the creation of the largest pure-play cement company in the country. The merger ratio is earnings accretive, as UTCEM will benefit from the pan-India presence of the combined entity.

Swap ratio earnings accretive, implies equity value of Rs108 bn for Samruddhi. The proposed merger ratio of four shares in UTCEM for every seven shares held in Samruddhi is earnings accretive for UTCEM shareholders (EPS of Rs84/share compared to Rs74 currently in FY2011E) and implies an equity valuation of Rs108 bn and an enterprise value of Rs130 bn for Samruddhi.

The combined entity will have a market capitalization of Rs200 bn (US$4.3 bn). Combined entity to have pan-India presence, help combat regional disparities. The merger of Samruddhi with UTCEM will create India’s largest cement company with an aggregate capacity of ~48 mn tpa, earning UTCEM a place amongst the top-ten cement companies in the world. Hence long term investors can buy UTCEM with a target price of Rs925/share.