Adani Group has acquired a controlling stake in Swiss major Holcim’s India business, the Ambuja Cement-ACC combine, for $10.5 billion in a fiercely-battled bidding process that saw participation from large players, including Sajjan Jindal-backed JSW Cement and Aditya Birla Group’s UltraTech Cement.

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). Adani Cement has to make a mandatory open offer to acquire an additional 20 per cent stake in Ambuja Cement.

The value for the Holcim stake and open offer consideration for Ambuja Cements and ACC is $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.

Moving beyond core biz

The acquisition is part of Adani Group’s plans to move beyond its core business of operating ports, power plants and coal mines and into areas like data centers, airports, new energy, digital services and retail. The deal with Holcim will catapult the Adani Cement, a new entrant into the cement business, as the second-largest cement maker in one shot.

Gautam Adani, Chairman of the Adani Group, said, “Not only is India expected to remain one of the world’s largest demand-driven economies for several decades, but 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.”

Expansion plans

Ambuja has a grinding capacity of 31 mtpa and plans to expand it to 40 mtpa in the next two years. About 42 per cent of its grinding capacities are in the north, followed by 28 per cent, 26 per cent and 5 per cent in the west, east and central regions, respectively.

Similarly, ACC has a grinding capacity of 35 mtpa, which is being expanded to 40 mtpa by the first half of 2023. Post-completion of the ongoing expansion, ACC will have 23-27 per cent grinding capacities in the east, south and central regions, and 15 per cent and 10 per cent capacity in the north and western regions, respectively.

“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.,” said a press statement.

‘Next era of growth’

Holcim, which has a presence in 90 countries, entered the Indian market 17 years ago by buying stake in these two companies. Despite facing challenges, Ambuja Cement and ACC have been sought after by investors for being the second and third largest players in cement sector and paying liberal dividend on a regular basis.

“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. “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,” he added.

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