IGI Logo

• On 15th May 2022, Holcim Ltd. (promoter company of Ambuja Cements Ltd. and ACC Ltd.) has signed a binding agreement with the Adani Group for selling its business in India. Whole transaction cost is anticipated at around USD 10.5bn.

• Holcim’sIndian assets includes 63.11% stake in Ambuja, which in turn owns a 50.05% interest in ACC; and a 4.48% directstake in ACC.

• With the acquisition of the Holcim’s assets, Adani will be almostin a pole position in the domestic cementsector.

• Currently, Ambuja-ACC combined have an installed cement capacity of around 66mn tonnes (31.4mn tonnes of Ambuja and 34.9mn tonnes of ACC). The two companies together have 23 cement plants, 14 grinding stations, 80 ready-mix concrete plants and over 50,000 channel partners acrossIndia. • The deal is likely to close in H2 of 2022, subject to CCI clearance.

• Since Adani doesn't have any cement asset in the country, this transaction is not likely to face any CCI hurdle.

• Pursuant to the deal, Adani will pay around Rs. 50,000cr (USD 6.5bn) in cash for the Holcim’s asset. The deal values Ambuja at Rs. 385 per share and ACC at Rs. 2,300 per share. Based on EV/tonne, Ambuja and ACC are together valued for around USD 165 per tonne.

• Adani will also make mandatory open offer for 26% of the shares held by the public in Ambuja and ACC each. This open offer would cost around Rs. 31,000cr (USD 4bn).

• As per the open offer, Adani will make a cash offer to acquire 51.6cr shares of Ambuja at Rs. 385 and 4.9cr shares of ACC at Rs. 2,300 per share.

• If 26% and more public owned shares are tendered, then Adani’s stake would climb over 89% in Ambuja and 81% in ACC.

• Adani has not given any indication of taking both Ambuja and ACC private post the acquisition. We feel that in the near term, there is no possibility of delisting the sharesfrom the bourses.

• According to the media reports, Holcim will not pay any taxes in India as the deal is protected under the India-Netherlandstreaty.

• Moreover, according to the Holcim’s management, after the sales of assets it would not be liable for the fines imposed by the CCI on Ambuja and ACC. The liabilitywill be on new owner. • In the past, CCI has imposed a fine of Rs. 1,148cr on ACC and Rs. 1,164cr on Ambuja. Currently, the matter is pending before the apex court.

• The acceptance ratio for the open offer is 70.72% for Ambuja and 57.33% for the ACC public shareholders.

• Below is the tentative schedule of major activitiesrelated to the open offer of both the companies.

To Read Complete Report & Disclaimer Click Here

Above views are of the author and not of the website kindly read disclaimer