Adani Family To Acquire Ambuja-ACC In A $10.5 Billion Deal
This makes the largest ever acquisition by Adani group.
Billionaire Gautam Adani will acquire cement companies Ambuja Cements Ltd. and ACC Ltd. held by Holcim Ltd. The Adani Family, via an offshore special purpose vehicle, has entered into definitive agreements for the acquisition of the Switzerland-based group's entire stake in two cement companies, said Adani group in a statement.
The value for the Holcim stake and open offer consideration for Ambuja Cements and ACC is nearly $10.5 billion, which makes this the largest ever acquisition by Adani Group, the statement said.
The deal translates into Rs 385 per share for Ambuja Cements and Rs 2,300 a share for ACC. The Ambuja Cement stock closed on Friday at Rs 359.10, while ACC ended at Rs 2,113.30 apiece.
Holcim held 63.19% in Ambuja Cements and 54.53% in ACC (of which 50.05% is held through Ambuja Cements). The Adani Group and the JSW Group were said to be the bidders for the cement companies with some reports suggesting late interest by UltraTech Cement Ltd. for the cement assets.
Under takeover regulations, the stake purchases by Adani will trigger mandatory open offers for 26% of shares held by public in Ambuja Cement and ACC each.
The deal is expected to close in the second half of this calendar year, subject to approval by the Competition Commission of India, said a Holcim investor presentation.
The Adani Family statement does not detail how it intends to finance the purchase from Holcim.
DEAL SNAPSHOT
→ Adani Family offshore SPV to buy Holcim's 63.19% stake in Ambuja Cements and 4.48% stake in ACC.
→ Adani to pay CHF 6.4 billion or approximately Rs 50,000 crore ($6.48 billion) in cash to Holcim for these stakes.
→ The deal values
Ambuja Cement: Rs 385 per share (CMP: Rs 358)
ACC: Rs 2,300 per share (CMP: Rs 2,102)
→ Adani to also make mandatory open offers for 26% of shares held by public in Ambuja and ACC each.
→ Open offers to cost max. Rs 31,106 crore ($4.01 billion). Actual cost depends on shares tendered.
→ Together, the purchase from Holcim and open offers could cost potentially $10.5 billion.
→ Deal expected to close in H2 2022.
What Adani Gets
This acquisition catapults Adani's nascent cement business into the major league. Incorporated in 2021, Adani Cement Industries Ltd., a wholly owned subsidiary of Adani Enterprises Ltd., planned to set up a 5-million-tonnes-per-annum facility in Mundra.
Ambuja Cements and ACC currently have a combined installed production capacity of around 70 MTPA, making them the second largest producer (combined) after Aditya Birla Group-owned UltraTech Cement (120 MTPA).
Ambuja and ACC together have 23 cement plants, 14 grinding stations, 80 ready-mix concrete plants and over 50,000 channel partners across India.
The Adani statement pointed out that while India is the world's second largest cement market, its average per capita cement consumption is half the global average and one-seventh of China's.
“When these factors are combined with the several adjacencies of our existing businesses that include the Adani Group's ports and logistics business, energy business, and real estate business, we believe that we will be able to build a uniquely integrated and differentiated business model and set ourselves up for significant capacity expansion,” Gautam Adani said in a statement.
We recognize that Ambuja and ACC operations are energy intensive and therefore when combined with our renewable power generation capabilities we gain a big head start in the decarbonization journey that is a must for Indian industry.Gautam Adani, Chairman, Adani Group
Holcim has been selling non-core assets to reduce debt. It recently divested its Brazilian unit for $1 billion and is also planning to sell its business in Zimbabwe, added the Bloomberg report.
News of a potential deal first came as a surprise to JPMorgan, which in its initial note highlighted that it thought India to be a core holding for Holcim.
India is Holcim’s second-largest market, generating 13% of its group sales (the first is the U.S. at 20% of sales), said an equity research report from Kepler Cheuvreux distributed by Macquarie.