Adani company gives up bid to acquire DB Power

MUMBAI: Adani Power's planned Rs 7,017-crore acquisition of DB Power collapsed on Wednesday as the deadline to complete the transaction expired.
The development comes as Gautam Adani's conglomerate reviews capital expenditure plans in the wake of a massive sell-off of his companies' shares, triggered by a scathing report by the US-based Hindenburg Research on January 24.
Adani Power had signed a purchase agreement for DB Power on August 18, 2022, and planned to conclude the deal by October 31, 2022. The deadline was repeatedly extended. DB Power owns a 1,200-megawatt coal-fired power plant in Janjgir Champa, Chhattisgarh, and its enterprise value including debt was estimated at Rs 7,017 crore.
The planned bid by Adani Power to acquire DB Power, which fell through on Wednesday, had been approved by India's competition regulator On September 29, 2022. However, the deadline to complete the transaction was extended four times, with the final closing date as February 15, 2023. On Wednesday, Adani Power informed stock exchanges that the closing date (long stop date in M&A parlance) to complete the DB Power acquisition had "expired".
The collapse of the transaction is a setback to the Adani Group, which has been aggressively expanding its presence across the country. The DB deal would have further solidified Adani's position as India's largest private sector thermal power producer and would have given a strong presence in one of the leading power generating and consuming belts.
When the DB deal was announced in 2022, it was Adani's second biggest M&A in the electricity sector after SB Energy India for which he had shelled out some Rs 26,000 crore in 2021.
The latest development shows how the apples-to-airport conglomerate is prioritising its financial health over aggressive growth. It is strengthening its balance sheet by retiring debt, recovering pledged shares and conserving cash as it attempts to calm investors spooked by Hindenburg's report on its business practices.
Adani Power, with 13.6GW capacity across seven thermal assets in five states and a 40MW solar asset, had a debt of Rs 36,031 crore as on September 30, 2022.
DB Power is the second deal that the group had to call off since the Hindenburg report. On February 1, a day after successfully closing the Rs 20,000-crore mega follow-on public offering (FPO) for Adani Enterprises, plummeting stock price of the company had forced the group to withdraw the offer.