The Adani family has signed an agreement to acquire a full stake in Swiss-based Holcim Group’s two Indian companies – Ambuja Cements and ACC for about 10 10.5 billion. This is Adani’s largest acquisition of all time and India’s largest M&A transaction in terms of infrastructure and equipment. Holcim, through its affiliates, has a 63.19% stake in Ambuja Cement and a 54.53% stake in ACC (of which 50.05% is through Ambuja Cement).
The $ 10.5-billion price per share includes open offer consideration. Adani Group said in a statement that the agreement was reached through an offshore special purpose vehicle. Adani Group Chairman Gautam Adani said, “Our move in the cement business is another legitimacy of our belief in our country’s growth story.
The acquisition of Holcim’s stake in Adani Group’s Ambuja will immediately take the company to the second slot, with a total production capacity of 70.9 million tons (mtpa) per annum. Ambuja Cement has an installation capacity of 31.45 mtpa, the retail portion contributes about 80% of its sales. On the other hand, the production capacity of ACC is 34.45 mtpa cement, and the total production capacity of these companies is 65.9 mtpa.
Ambuja has a market cap of Rs 71,245 crore, with a promoter holding 63.19%, while ACC has a market cap of Rs 39,693 crore with a promoter share of 54.53%.
Adani says India is not expected to be one of the world’s largest demand-driven economies for decades, remains the world’s second largest cement market and still accounts for less than half of the world’s average per capita cement consumption.
Statistically, China’s cement consumption is seven times higher than India’s. When these factors are combined with the various affiliations of Adani Group’s existing business including port and logistics business, energy business and real estate business, the group believes that it will be able to create a uniquely integrated and distinct business model, Adani. Says
Acquisition Regulatory approval and subject to conditions, it has been added.
Consumption of only 242 kg of cement per capita in India, compared to the global average of 525 kg per capita, has a significant potential for growth in the cement sector. With the post-epidemic recovery in the construction and other infrastructure sectors, rapid urbanization, a growing middle-class and affordable housing tailwind is expected to continue the growth of the cement sector for decades to come.
Holcim, which continues to dispose of non-core assets across specific geographical areas, also wanted to sell its stake in India’s cement business, Ambuja Cements and ACC. In addition to its 63.1% stake in Ambuja Cement, it has a 4.48% stake in ACC, while Ambuja Cements holds 50.05% stake in ACC. Holcim deducted ব্র 1 billion from its Brazilian unit in September and is now planning to sell its business in Zimbabwe.
Adani Group, which has no presence in cement, was believed to be searching for entry into the sector. The group had planned to set up a 5 MTPA cement production facility in Raigad district of Maharashtra with an estimated investment of Rs 1,000 crore.
The JSW Group, led by industrialist Sajjan Jindal, the Aditya Birla Group’s Ultratech Cement and the ArcelorMittal Group are also thought to be competing for the Holsim Group’s Indian assets. The JSW Group intended to bid $ 7-billion for twin assets to raise $ 4.5 billion from its own kitty and the remaining $ 2.5 billion from private equity players.
JSW Group, which has an installed capacity of 16 mtpa by March-end, plans to increase it to 25 mtpa by FY24. However, Ultratech Cement – with a production capacity of 120 MTPA – will remain the leader in the country.
India is the second largest producer of cement in the world, with an estimated production capacity of 550 MTPA, accounting for about 8% of global cement production.