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Saturday, July 02, 2022

Biggest infra materials deal: Holcim’s India biz is Adani’s for $10.5 billion

Through its subsidiaries, Holcim holds 63.19% in Ambuja Cements Ltd and 54.53% in ACC Ltd (of which 50.05% is held through Ambuja Cements). This is the largest ever acquisition by Adani, which beat the JSW and Aditya Birla groups to the deal.

By: Express News Service | Mumbai |
Updated: May 16, 2022 7:13:32 am
Gautam Adani with Holcim CEO Jan Jenisch in Ahmedabad, Sunday. (PTI)

The Adani group has acquired Zurich-based Holcim’s cement business in India for $10.5 billion (about Rs 81,000 crore) in India’s largest ever M&A transaction in the infrastructure and materials space.

Through its subsidiaries, Holcim holds 63.19% in Ambuja Cements Ltd and 54.53% in ACC Ltd (of which 50.05% is held through Ambuja Cements). This is the largest ever acquisition by Adani, which beat the JSW and Aditya Birla groups to the deal.

Holcim’s exit from India follows several high-profile departures of multinational companies, including Ford, General Motors, Harley Davidson, MAN Truck, Hutchison, Etisalat, Fidelity, and Citibank, which sold its retail business recently, and some investment banks.

Holcim 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.

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Ambuja Cements and ACC currently have a combined installed production capacity of 70 MTPA. “The two companies are among the strongest brands in India with immense depth of manufacturing and supply chain infrastructure, represented by their 23 cement plants, 14 grinding stations, 80 ready-mix concrete plants and over 50,000 channel partners across India,” Adani said.

With this acquisition, Adani is now India’s second largest cement manufacturer after Ultratech Cement of the Aditya Birla group.

Gautam Adani, chairman, Adani group, said: “With Holcim’s global leadership in sustainability, we are acquiring some of the most efficient building materials operations in India, powered with clean technologies like heat recovery systems.”

The Adani group last year set up two cement subsidiaries — Adani Cementation Ltd, which was planning to set up two cement units at Dahej in Gujarat and Raigarh in Maharashtra; and Adani Cement Ltd.

“We recognize that Ambuja and ACC operations are energy intensive and therefore when combined with our renewable power generation capabilities we gain a big head start in the decarbonisation journey that is a must for Indian industry,” Adani said.

Shares of Ambuja Cements which has a market capitalisation of Rs 71,244 crore, closed 3.79% down at Rs 358.80 on Friday. ACC closed with a loss of 3.02% at Rs 2,113.70 and a market capitalisation of Rs 39,692 crore.

Holcim CEO Jan Jenisch said: “In the last twelve months, we have invested CHF 5 billion in Solutions & Products as a new growth engine for the company, while continuously pursuing bolt-ons in aggregates and ready-mix concrete. Holcim is ready to seize further opportunities, in line with our ‘Strategy 2025 – Accelerating Green Growth’, to become the global leader in innovative and sustainable building solutions.”

Holcim bought Ambuja Cement for $ 800 million in 2005. ACC was bought by Ambuja in three tranches from the Tata group for Rs 370 per share between 1999 and 2001.

With India’s cement consumption at just 242 kg per capita, compared to the global average of 525 kg per capita, there is significant potential for the growth of the cement sector in the country.

While India continues to be the world’s second largest cement market, it has less than half the global average per capita cement consumption, Adani said.

“In statistical comparison, China’s cement consumption is over seven times 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,” Adani said.

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