The Adani family has agreed to buy Swiss building materials maker Holcim Ltd’s India assets Ambuja Cements and ACC Ltd for $10.5 billion ( ₹80,000 crore) in one of the largest ever acquisitions by an Indian group, the two groups said in a joint statement.
The Adani family, through an offshore special purpose vehicle, agreed to acquire 63.19% of Ambuja Cements and 54.53% of ACC, the statement said. The value of the Holcim stake and the open offer consideration for Ambuja Cements and ACC made by Adani Group makes the deal the largest ever acquisition by Adani Group and India’s largest-ever acquisition in the infrastructure and materials space, the statement added.
“Our move into the cement business is yet another validation of our belief in our nation’s growth story,” said Gautam Adani, chairman of 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. In statistical comparison, China’s cement consumption is over 7X that of India’s.”
The acquisition will propel Adani Group to become the second-largest cement maker in India after Aditya Birla Group’s UltraTech Cement Ltd. The acquisition comes even as the government boosts spending on capital expenditure to boost growth. Adani Group plans to build an integrated business model, with the cement business supporting its other infrastructure businesses, including ports, logistics, energy and real estate.
Since the acquisition of promoter holdings in the two firms will result in a change of ownership, two separate open offers for public shareholders will be mandatory.
Adani Group may spend $3-3.5 billion to buy shares from public shareholders.
Adani Group has offered to pay ₹385 per share for Ambuja Cements, a person aware of the development said, requesting anonymity. The shares of Ambuja Cements last traded at ₹358.80 on BSE on Friday.
Deutsche Bank, BarCap and Standard Chartered were financiers to the deal. Deutsche Bank was the financial adviser to Adani Group.
On 9 May, Mint first reported that Adani is leading the race to buy Holcim’s India assets.
With India’s cement consumption at just 242 kg per capita compared to the global average of 525 kg per capita, there is significant potential for the growth of the cement sector in India. The tailwinds of rapid urbanization, the growing middle class and affordable housing, together with the post-pandemic recovery in construction and other infrastructure sectors, are expected to continue driving the growth of the cement sector over the next several decades, the two companies said in the release.
Ambuja Cements and ACC have a combined installed production capacity of around 70 million tonnes per annum, with 23 cement plants, 14 grinding stations, 80 ready-mix concrete plants and over 50,000 channel partners across India.
Both Ambuja and ACC would benefit from synergies with the integrated Adani infrastructure platform, especially in the areas of raw material, renewable power and logistics, where Adani Portfolio companies have vast experience and deep expertise, the press release said. Adani Group had already actively begun preparing for the mega foray into the cement business by hiring people, creating required divisions and setting up operational facilities.