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India's and Asia's richest man Gautam Adani, on Sunday, won the race to buy Holcim's stake in Ambuja Cements and ACC India for a massive amount of $10.5 billion.
The Adani Group will buy a 63.19% stake in Ambuja Cements and a 54.53% stake in ACC Cements through an offshore special purpose vehicle for a consideration of $10.5 billion. This is the Adani Group's as well as India's largest M&A deal in the infrastructure and building materials sector. The Group is buying the shares of Ambuja at a price of Rs 385 per share and that of ACC at a price of Rs 2,300 per share.
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This marks the ports-to-energy group's entry into the cement sector after outbidding large players like Aditya Birla Group which operates UltraTech Cement & the steel-to-cement JSW Group. This also places the group as the second-largest cement producer in the country, lagging behind UltraTech Cement but beating other giants like Shree Cement and Dalmia.
Adani Group is purchasing the entire stake that Holcim had in these two publicly traded companies as well as purchasing Ambuja's holding in ACC Cements. Moreover, the Group will make an open offer to buy 26% in these 2 companies from non-promoter shareholders in accordance with the norms of SEBI. The deal is expected to be complete by the end of this fiscal year.
This deal is a big win for the Adani Group as it explained how India's per capita cement consumption, at 242 kgs, is lower than the global average of 525 kgs, representing a significant room for growth as India's rapid urbanization and growing middle class along with affordable housing serves as driving factors of the cement industry. Holcim's exit, in line with its 'strategy 2025' which aims for sustainable solutions for the building materials sector, is one of the largest FDI exits from India.
“Our move into the cement business is yet another validation of our belief in our nation's growth story. Not only is India expected to remain one of the world's largest demand-driven economies for several decades, but India also continues to be the world's second-largest cement maker and yet has less than half of the global average per capita cement consumption.” Mr. Adani, Chairman of the Adani Group said.
The stock of Ambuja witnessed 4x times more volume today as the stock opened up 2.2% while ACC saw 7x times greater volume. ACC is currently up over 4% around Rs 2,206 per share while Ambuja has over 2% trading near Rs 365 per share.
Article by Aman Agarwal.
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