Jaiprakash Associates Ltd. shares jumped Thursday, after people familiar with the matter said the company is nearing an agreement to sell a central India cement grinding plant to the nation’s biggest producer of the building material.
Jaiprakash shares climbed 12 percent, the most in more than three weeks, to close at 9.75 rupees Thursday in Mumbai. The benchmark S&P BSE Sensex rose 2 percent. The company is in advanced talks to sell its cement facility in Bhilai, in Chhattisgarh state, to Indian billionaire Kumar Mangalam Birla’s Ultratech Cement Ltd., the people said Wednesday, asking not to be identified as the matter is private.
Ultratech has been discussing a purchase price of 6 billion rupees to 7 billion rupees ($106 million) for the plant, which has 2.2 million tons of annual production capacity, according to the people. The two companies are waiting for a nod from state-run steelmaker Steel Authority of India Ltd., which owns 26 percent of the plant, before finalizing the deal, the people said.
An acquisition would help Birla’s conglomerate meet its target of increasing cement capacity to 100 million tons in a decade, a vision the billionaire outlined in November last year. It would mark Ultratech’s fourth purchase of a cement plant from Jaiprakash group, which has been selling assets to repay debt.
Pragnya Ram, a spokeswoman for the Aditya Birla Group that controls Ultratech, declined to comment. Madhu Pillai, a spokeswoman for Jaiprakash, said the group doesn’t respond to speculation, while Rakesh Singhal, a spokesman for SAIL, said he couldn’t immediately comment.
Ultratech agreed in December to buy two of Jaiprakash’s central Indian cement plants at an enterprise value of 54 billion rupees. That deal followed its 2014 purchase of a Jaiprakash cement facility in the western state of Gujarat for 38 billion rupees including debt.