True North Fund VI LLP has agreed to divest up to 50.1% of its 54.6% stake in Shree Digvijay Cement to India Resurgence Fund, marking a significant ownership change in the Gujarat-based cement manufacturer. The deal, valued at ₹631.00 crore, will be executed at ₹85.00 per share, representing a 10% discount to the previous closing price.

Transaction Details

The stake sale will be carried out in two tranches, triggering an open offer for an additional 26% stake from public shareholders at ₹92.00 per share. This move is expected to reshape the ownership structure of Shree Digvijay Cement, which operates a 3 MT plant in Jamnagar, Gujarat.

Strategic Partnership with Hi-Bond Cement

In a parallel development, Shree Digvijay Cement has entered into a strategic agreement with Hi-Bond Cement, signing a 10-year exclusive cement distribution deal. The agreement, valued at ₹600.00 crore annually, requires Shree Digvijay to provide a ₹400.00 crore refundable deposit to Hi-Bond Cement.

Future Expansion Possibilities

As part of the arrangement, Shree Digvijay Cement has secured a call option to acquire 100% of Hi-Bond Cement within eight years. This strategic move could potentially expand Shree Digvijay's production capacity, as Hi-Bond operates a 3.2 MT unit in Rajkot, Gujarat.

Market Response

Despite the significant announcements, Shree Digvijay Cement's stock closed 0.9% lower at ₹95.86. However, the stock has gained 16% over the past month, indicating overall positive market sentiment.

Impact on Shareholders

The open offer at ₹92.00 per share presents an opportunity for public shareholders to exit at a premium to the price agreed upon in the main transaction. This could potentially lead to increased trading activity as shareholders evaluate their options.

Industry Implications

This deal highlights the ongoing consolidation and strategic partnerships in India's cement sector. The collaboration between Shree Digvijay Cement and Hi-Bond Cement, if it leads to a future acquisition, could create a stronger regional player in Gujarat's cement market.

The cement industry in India continues to attract investor interest, with this transaction showcasing the potential for value creation through strategic stake sales and operational partnerships.

Shree Digvijay Cement has recently addressed market speculations regarding potential interest from the Adani Group in its assets. The company has categorically stated that it is not aware of any interest from the Adani Group concerning its plant and port assets.

Company Statement

In a clear and concise communication, Shree Digvijay Cement has clarified its position on the rumored interest from the Adani Group. The cement manufacturer emphasized that it has no knowledge of any plans or intentions by the Adani Group to acquire or show interest in its plant facilities or port assets.

Market Implications

This statement from Shree Digvijay Cement comes amidst a backdrop of ongoing consolidation and acquisition activities in the Indian cement sector. The clarification serves to address and potentially quell any market rumors or speculations that may have arisen regarding a possible deal between the two entities.

Transparency in Corporate Communications

By promptly addressing these speculations, Shree Digvijay Cement demonstrates its commitment to transparent communication with its stakeholders. Such clarity helps in maintaining market integrity and prevents undue speculation that could potentially impact stock prices or investor decisions.

The company's straightforward denial of knowledge regarding any interest from the Adani Group underscores the importance of official corporate communications in dispelling market rumors and maintaining accurate information flow in the financial markets.