Adani Group Taps into Cement Industry: Key Details About Holcim Mega Deal

By Malvika Gurung

Investing.com -- The energy-to-consumer conglomerate Adani (NS: APSE ) Group has entered into a binding agreement with the Swiss cement giant Holcim (SIX: HOLN ) Ltd, to acquire its cement business in India, which will position Adani Group as the second-largest cement company in the country.

This acquisition by Adani is not only the conglomerate’s largest-ever but also India’s largest-ever M&A transaction in the infrastructure and materials space.

The deal includes the sale of Holcim’s stakes in cement majors Ambuja Cements (NS: ABUJ ) and ACC Ltd (NS: ACC ). to the infrastructure conglomerate Adani Group, valued at Rs 81,400 crore or $10.5 billion.

Holcim held a 63.19% stake in Ambuja Cements and 54.53% in ACC. Further, reports suggest that the Adani Group could use another $3-3.5 billion to buy the shares of public shareholders.

The offer size for Ambuja Cements is Rs 385/share and Rs 2,300 apiece for Ambuja Cements, which is at a premium of about 8-9% over the current price.

On a successful open offer, Adani Group’s holdings in Ambuja and ACC will rise to 89% and 81%, respectively, making it the second-largest cement company in India, having a capacity of producing about 70 MTPA cement.

The global average cement consumption is 525 kg/capita, of which India’s share is only 242 kg/capita, indicating a tremendous growth opportunity in the country. 

Adani Group believes to build a uniquely integrated and differentiated business model, which would set it up for significant capacity expansion.