Adani Group has entered into an exclusive agreement to buy Swiss building material maker Holcim Ltd’s India assets—Ambuja Cements and ACC Ltd, two people with direct knowledge of the matter said. The Gautam Adani-led group bid about $10.5 billion (Rs. 80,000 crore) to emerge as the top bidder, the people said.
The companies are expected to make an announcement soon, and an open offer for the two Holcim-owned cement makers listed on stock exchanges in India will follow. Adani Group is likely to spend an additional $3-3.5 billion to buy shares from the public shareholders, which may raise the total acquisition cost to around $13.5 billion.
Adani Group has offered to pay Rs. 385 per share for Ambuja Cements, one of the two people said, requesting anonymity. Holcim will now allow Adani Group to inspect the assets and finances of Gujarat Ambuja and ACC.
The shares of Ambuja Cements last traded at Rs. 358.80 on BSE on Friday. “There is also a possibility of other bidders, which include Ultra Tech cement and JSW group, being asked to improve their offer,” the person said.
On 9 May, Mint first reported that Adani Group is leading the race to buy Holcim’s India assets with a war chest of $13.5 billion.
According to the contours of the deal, Adani Group’s promoter entities together may invest a total of close to $10.5 billion in buying Holcim’s stake in Ambuja and ACC. Funding for the mandatory open offer will be done primarily via a mix of bank credit, convertibles and special purpose vehicles, as per the first person.
Currently, Ambuja Cements has a market cap of Rs. 71,245 crore, with a promoter holding of 63.19%, while ACC has a market cap of Rs. 39,693 crore with a promoter stake of 54.53%. But acquisitions typically happen on the basis of the target company’s stock’s volume-weighted average price for the preceding six months.
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 has already actively begun preparing for the mega foray into the cement business by hiring people, creating required divisions and setting up operational facilities, said the two people. Adani has been keener than other contenders for Ambuja and ACC because owning a cement business fits well with the group’s strategy for its large realty and infrastructure projects businesses.
To be sure, Adani Group has already formed a wholly owned subsidiary under Adani Enterprises Ltd called Adani Cement Industries in June last year. In Gujarat, Adani has been planning to set up a fly ash-based cement manufacturing facility and a small 5-MTPA cement plant in Maharashtra with an initial investment of up to ₹1,000 crore, next to the JSW unit in Dolvi.
Adani has another cement subsidiary Adani Cementation Ltd, which has been planning to build an integrated facility in Gujarat. Once Adani completes the Ambuja-ACC acquisition, the $200 billion conglomerate will directly jump to the number two position in the cement sector with a combined production capacity of 67MTPA. An email query sent to Adani and Holcim on Sunday remained unanswered.