Billionaire Gautam Adani on Sunday clinched a $10.5 billion deal that grants his conglomerate a 63.19 per cent stake in Swiss cement major Holcim Ltd’s India operations, Ambuja Cements Ltd and its subsidiary ACC.
With this, the Adani Group became the second largest cement producer in the country after the Aditya Birla Group owned UltraTech Cement, the company said in a statement. The JSW Group was also in the race to acquire the Ambuja-ACC combine.
Holcim, through its subsidiaries, holds 63.19 per cent stake in Ambuja Cements and 54.53 per cent in ACC (of which 50.05 per cent is held through Ambuja Cements). The value for the Holcim stake and open offer consideration for Ambuja Cements and ACC at $10.5 billion makes this India’s biggest M&A transaction in the infrastructure and materials space, the Adani Group said.
Holcim expects to receive 6.4 billion Swiss francs ($6.4 billion) of cash proceeds from the sale. The Adani Group said it would acquire more shares through an open offer. The transaction is expected to close in the second half of 2022.
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The divestment in its India businesses is the latest move by Holcim to reduce its reliance on carbon-intensive cement production, an industrial process which produces high levels of CO2 emissions and has therefore deterred many environmentally-conscious investors.
Adani, touted as Asia’s richest man by Forbes, entered into definitive agreements for the acquisition of Holcim Ltd’s entire stake in Ambuja and ACC through an offshore special purpose vehicle.
In the last couple of years, the Adani Group has diversified beyond its core business of operating ports, power plants and coal mines into airports, data centres and clean energy.
The group had last year set up two cement subsidiaries — Adani Cementation Ltd, which was planning to set up two cement units at Dahej in Gujarat and Raigarh in Maharashtra; and Adani Cement Ltd.
“Our move into the cement business is yet another validation of our belief in our nation’s growth story,” said Gautam Adani, Chairman of the Adani Group. “Not only is India expected to remain one of the world’s largest demand-driven economies for several decades, India also continues to be the world’s second largest cement market and yet has less than half of the global average per capita cement consumption.”