Adani Buys Ambuja Cement, ACC From Holcim In India’s Largest Cement Deal; 6 Key Points


Billionaire Gautam Adani on Sunday won the race to acquire Swiss cement major Holcim’s stake in Ambuja Cements and its subsidiary ACC for $10.5 bn (around Rs 81,361 crore), including the open offers. Gautam Adani said the group expects aggressive expansion and plans to double the existing 70 million tonnes per year capacity within the next five years. He added that the existing teams will be able to bring in the expertise to achieve the group’s growth plans going forward. The Adani family, through an offshore special-purpose vehicle, announced that it had entered into definitive agreements for the acquisition of Holcim Ltd’s entire stake in two of India’s leading cement companies — Ambuja Cements and ACC — the Adani group said in a statement.

The value for the Holcim stake and open offer consideration makes this the largest ever acquisition by Adani, and India’s largest-ever M&A transaction in the infrastructure and materials space. “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 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. When these factors are combined with the several adjacencies of our existing businesses including the Adani Group’s ports and logistics business, energy business, and real estate business, we believe that we will be able to build a uniquely integrated and differentiated business model and set ourselves up for significant capacity expansion.” Adani added.

India’s Second-Largest Cement Player

The deal will make Adani Group the second-largest cement player in the country. The conglomerate has agreed to acquire a 63.19 per cent stake in Ambuja Cements and about 54.53 per cent stake in ACC. The $10.5-billion value for the stake includes open offer consideration as well. With a combined capacity of 70 million tonnes per annum, the deal puts Adani just behind India’s largest cement maker—Aditya Birla Group’s UltraTech Cement Ltd.—with a capacity of 120 MTPA.

Deal Valuation

Adani has agreed to buy shares in Ambuja Cements for Rs 385 per share and shares in ACC for Rs 2300 apiece, according to the statement. Thus the $10.5-billion deal is at a 4 per cent premium (for both ACC and Ambuja) from last close on April 13. If one looks at the share price from Friday’s close, Adani is buying Ambuja at over 7 per cent premium and ACC at about 8 per cent premium.

Other Bidders For The Deal

Apart from Adani Enterprises, companies such as industrialist Sajjan Jindal-led JSW Group, Dalmia Bharat, Aditya Birla Group’s UltraTech Cement Ltd and ArcelorMittal were also believed to be in the race for Holcim Group’s Indian assets.

Why Did Holcim Exit India?

The world’s largest cement maker Holcim last month announced its exit from the country. The company through two listed entities ACC and Ambuja has 66 million tonne per annum capacity (MTPA).

The group entered the market 17 years ago and the exit will put its listed arms, Ambuja and ACC, up for sale. Holcim’s exit is part of the group’s ‘strategy 2025’ that aims for sustainable solutions for the building materials sector. The significance of cement in the overall group is already declining compared to ready mix concrete, aggregates, roofing, and green building solutions. “We will reach 30 percent of group net sales in solutions and products…” the company had said last November last year while announcing its new vision.

No Tax Liability, Indemnity In The Deal

There will be no indemnity or tax liability for the Switzerland-based Holcim Group in its $6.4 billion transaction to sell its stake in Ambuja Cement and ACC to the Adani Group, the company said in an analyst call on Monday.

Adani to Pay Fines Slapped on Ambuja, ACC for Cartelisation

Adani group is liable for anti-trust fines against Ambuja Cements and ACC in India which are being litigated in the top court. Ambuja Cements and ACC were found guilty of price cartelisation along with other cement companies in a 2016 investigation by the Competition Commission of India.

The CCI had imposed a penalty of Rs 6,300 crore on 11 cement companies. Of the Rs 6,300 crore fine, Ambuja Cements was liable to pay Rs 1,164 crore and ACC Rs 1,148 crore.

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