In a deal of 10.5 billion dollar Adani to acquire Holcim India assets

The Adani Group, Indian multinational conglomerate, headquartered in Ahmedabad is set to procure 63.1 per cent of Ambuja Cements Ltd along with related assets. In the last couple of years Adani has diversified beyond its core business of operating ports, power plants and coal mines into airports, data centres and clean energy.

NEW DELHI: Gautam Adani on Sunday, made big announcement about the deal to acquire a controlling stake in Holcim Ltd’s businesses in India for USD 10.5 billion, marking business entry into the cement sector.

The Adani Group, Indian multinational conglomerate, headquartered in Ahmedabad is set to procure 63.1 per cent of Ambuja Cements Ltd along with related assets. In the last couple of years Adani has diversified beyond its core business of operating ports, power plants and coal mines into airports, data centres and clean energy.

“The Adani Family, through an offshore special purpose vehicle, announced that it had entered into definitive agreements for the acquisition of Switzerland-based Holcim Ltd‘s entire stake in two of India’s leading cement companies – Ambuja Cements Ltd and ACC Ltd,” the group said in a statement.

Holcim, through its subsidiaries, holds 63.19 per cent in Ambuja Cements and 54.53 per cent in ACC (of which 50.05 per cent is held through Ambuja Cements).

Holcim in a statement said, “The corresponding offer share prices of Rs 385 for Ambuja Cement and Rs 2,300 for ACC translate into cash proceeds of CHF 6.4 billion (Swiss Franc) for Holcim.”

“The value for the Holcim stake and open offer consideration for Ambuja Cements and ACC is USD 10.5 billion, which makes this the largest-ever acquisition by Adani, and India’s largest-ever M&A transaction in the infrastructure and materials space,” the statement said.

After branching out of its core business of operating ports, power plants and coal mines into airports, data centres and clean energy Adani has set up two cement subsidiaries last year- Adani Cementation Ltd and Adani Cement Ltd.

Holcim, world’s largest cement maker announced its exit from the country after struggling here for a long in a statement made last month. The company through two listed entities ACC and Ambuja has 66 million tonnes per annum capacity (MTPA).

Holcim, in the process of winding up from India was in business talks with Aditya Birla Group, JSW Group and few others.

In 2015, Holcim and France based Lafarge merged and created LafargeHolcim. Later Ambuja bought Holcim India’s 24 per cent stake in ACC in 2016 which resulted in the latter becoming Ambuja’s subsidiary with a 50.05 per cent stake.

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.

In his statement Gautam Adani said, “Our move into the cement business is yet another validation of our belief in our nation’s growth story,” he added, “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 that include 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,” said Adani, who recently overtook Mukesh Ambani as the country’s richest man.

Holcim’s global leadership in cement production and sustainable best practices and its cutting-edge technologies will allow the group to accelerate the path to greener cement production.

“In addition, Ambuja Cements and ACC are two of the strongest brands recognized across India. When augmented with our renewable power generation footprint, we gain a big head start in the decarbonisation journey that is a must for cement production. This combination of all our capabilities makes me confident that we will be able to establish the cleanest and most sustainable cement manufacturing processes that will meet or exceed global benchmarks.”

“I am delighted that the Adani Group is acquiring our business in India to lead its next era of growth,” said Jan Jenisch, CEO of Holcim Limited.

“Gautam Adani is a highly recognized business leader in India who shares our deep commitment to sustainability, people and communities. I would like to thank our 10,000 Indian colleagues who have played an essential role in the development of our business over the years with their relentless dedication and expertise. I am confident that the Adani Group is the perfect home for them as well as our customers to continue to thrive.”

With India’s cement consumption at just 242 kg per capita, as compared to the global average of 525 kg per capita, there is significant potential for the growth of the cement sector in the country. The tailwinds of rapid urbanization, the growing middle class and affordable housing together with the post-pandemic recovery in construction and other infrastructure sectors are expected to continue driving the growth of the cement sector over the next several decades.

“Both Ambuja and ACC will benefit from synergies with the integrated Adani infrastructure platform, especially in the areas of raw material, renewable power and logistics, where Adani Portfolio companies have vast experience and deep expertise. This will enable higher margins and return on capital employed for the two companies. The companies will also benefit from Adani’s focus on ESG, Circular Economy and Capital Management Philosophy,” the statement added.

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