group wins race to acquire Holcim India assets for $10.5 billion
Premium- An announcement is expected soon along with an open offer for the companies both of which are listed stock exchanges in India
MUMBAI : Adani Group led by billionaire Gautam Adani has been declared the highest bidder for Zurich headquartered Holcim group’s Ambuja Cements Ltd. and ACC Ltd for roughly $10.5 billion (around Rs. 80,000 crore, two persons with direct knowledge of the matter told Mint requesting anonymity. According to the persons cited above, an announcement is expected soon along with an open offer for the companies both of which are listed stock exchanges in India.
The open offer may cost around $3-3.5 billion separately, which will make the total bid size around $13.5 billion. An official announcement is likely soon," said the first person. "The acquisition has been agreed between Holcim and Adani Group at a price of Rs. 385 per share of Ambuja Cements," said the second person. Ambuja Cements is trading at Rs. 358.80 apiece on BSE as per Friday's closing on BSE. " There is also a possibility of other bidders which include Ultra Tech cement and JSW group being asked to improve their offer" the second person said.
On 9 May, Mint first reported that Adani Group had taken the lead in the race to buy Switzerland-based Holcim’s India arms—Ambuja Cements Ltd and ACC Ltd—with a war chest of $13.5 billion for the deal.
As per the contours of the deal, Adani Group's promoter entities together may invest a total of close to $10.5 billion for buying Holcim's stake in Ambuja and ACC, which includes a premium to the market price. 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 an 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 cement business by hiring people, creating required divisions and setting up operational facilities, said the two people. Adani has been more keen 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.
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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 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.