The Adani household has signed definitive agreements to accumulate Switzerland-based Holcim Group’s total stake in two Indian corporations — Ambuja Cements and ACC — for about $10.5 billion. That is additionally the largest-ever acquisition by Adani, and India’s largest-ever M&A transaction within the infrastructure and supplies house. Holcim, by way of its subsidiaries, holds a 63.19% stake in Ambuja Cements and 54.53% in ACC (of which 50.05% is held by way of Ambuja Cements).
The $10.5-billion worth for the stake contains open supply consideration additionally. The deal was accomplished by way of an offshore particular goal car, Adani Group stated in an announcement. “Our transfer into the cement enterprise is one more validation of our perception in our nation’s progress story,” stated Gautam Adani, chairman, Adani Group.
Adani Group’s acquisition of Holcim’s stake in Ambuja would instantly propel the corporate to the second slot, with a complete manufacturing capability of 70.9 million tonne every year (mtpa). Ambuja Cements has an put in capability of 31.45 mtpa, with the retail section contributing to about 80% of its gross sales. On its half, ACC has a manufacturing capability of 34.45 mtpa of cement, and collectively these corporations have a complete manufacturing capability of 65.9 mtpa.
Ambuja has a market cap of Rs 71,245 crore, with a promoter holding of 63.19%, whereas ACC has a market cap of Rs 39,693 crore with a promoter stake of 54.53%.
Adani stated not solely is India anticipated to stay one of many world’s largest demand-driven economies for a number of many years, India additionally continues to be the world’s second-largest cement market and but has lower than half of the worldwide common per capita cement consumption.
In statistical comparability, China’s cement consumption is over seven instances that of India’s. When these elements are mixed with the a number of adjacencies of the Adani group’s present companies that embrace the ports and logistics enterprise, vitality enterprise, and actual property enterprise, the group believes that it is going to be in a position to construct a uniquely built-in and differentiated enterprise mannequin, Adani stated.
The acquisition is topic to regulatory approvals and circumstances, it added.
With India’s cement consumption at simply 242 kg per capita, in comparison with the worldwide common of 525 kg per capita, there’s a important potential for the expansion of the cement sector. The tailwinds of fast urbanisation, the rising center class and inexpensive housing along with the post-pandemic restoration in building and different infrastructure sectors are anticipated to proceed driving the expansion of the cement sector over the subsequent a number of many years.
Holcim, which has been disposing of non-core property throughout sure geographies, was additionally trying to promote its stake in India cement companies, Ambuja Cements and ACC. Other than its 63.1% stake in Ambuja Cements, it holds a 4.48% stake in ACC, whereas Ambuja Cements holds a 50.05% stake in ACC. Holcim had divested its Brazilian unit for $1 billion in September and now plans to promote its enterprise in Zimbabwe.
Adani Group, which doesn’t have a presence in cement, was believed to be exploring to make a foray into the sector. The Group was planning to arrange a 5 mtpa cement manufacturing facility in Maharashtra’s Raigad district with an estimated funding of Rs 1,000 crore.
Industrialist Sajjan Jindal-led JSW Group, Aditya Birla Group’s UltraTech Cement and ArcelorMittal have been additionally believed to be within the race for Holcim Group’s Indian property. JSW Group was intending to position a $7-billion bid for the dual property, with $4.5 billion from its personal kitty and the remaining $2.5 billion to be raised from personal fairness gamers.
JSW Group, which has an put in capability of 16 mtpa as of March-end, had plans to extend it to 25 mtpa by FY24. Nevertheless, UltraTech Cement — with a manufacturing capability of 120 mtpa — would proceed to be the chief within the nation.
India is the second-largest cement producer on this planet, accounting for about 8% of world cement manufacturing with an estimated manufacturing capability of 550 MTPA.