Mumbai: Germany's Heidelberg Cement will acquire 51-per cent equity stake in Mysore Cements Ltd for $94 million. The S K Birla group-controlled Mysore Cements said the transfer of shares would be made through the joint venture route whereby it proposes to allot up to 66.5-million shares to the German company.

The allotment will be made as a preferential shares issue at Rs54 ($1.15) per share, subject to necessary approvals, a Mysore Cements statement said.

The promoters plan to sell another 13.4-million shares to Heidelberg at Rs58 a share, giving the German firm a 51 per cent holding. Heidelberg Cement may also make an open offer to buy up to 20 per cent from shareholders at Rs58 a share.

Mysore Cements has convened an extraordinary general meeting of shareholders on August 16 at Bangalore for approval of the preferential issue.

"This proposal enables Mysore Cements not only to retain its corporate identity but also raises resources to help it address its debt and capital expenditure needs," the company statement added.

Mysore Cements has accumulated losses of about Rs260 crore.

With plants in Karnataka, Madhya Pradesh and Uttar Pradesh, Mysore Cements has a production capacity of 2.10-million tonnes per annum.

The cement industry in the country is consolidating even as it continues to be profitable. Swiss cement major Holcim now owns over 60 per cent stake in India's largest cement company, Associated Cement Companies. Holcim also bought a 14.8 per cent equity stake in Gujarat Ambuja Cement and offered to buy another 20 per cent from shareholders.

With an installed capacity of 158-million tones a year and another 40 million in the pipeline, India is the second largest cement producer after China.

Cement prices are expected to rule firm with demand continuing to outstrip production amidst a real estate boom and the government's focus on infrastructure development.