After initial splash, Ambuja-ACC give up much of the gains

Our Bureau | | Updated on: May 16, 2022

Both companies open strong, but lose steam through the day only to close with muted gains

Shares of both Ambuja Cements and ACC could not retain the initial gains made in the markets following the announcement of Adani Group’s acquisition of the companies in a deal valued at ₹81,200 crore.

Ambuja opened on a bullish note at ₹370 against the previous close of ₹359. It rallied further to touch day’s high of ₹377, but dipped to a low of ₹360 and closed with a gain of 3 per cent at ₹368.

Similarly, ACC opened at ₹2,149 against the previous close of ₹2,114, touched a high of ₹2,288 and dipped to day’s low of ₹2,149 before closing with a gain of 4 per cent at ₹2,192.

Vinod Nair, Head of Research at Geojit Financial Services, said the deal could trigger strong competition among existing players with the emergence of the new player, though there will be no change in the total capacity of the industry with this deal.

Adani Group has announced plans to double its capacity and the cost benefits can cause strong competition among existing players, especially for companies with smaller market shares. In the long term, the industry will be benefited due to further consolidation, he added.

Adani Group’s open offer

The group, through its Mauritius-based subsidiary Endeavour Trade and Investment, has made an open offer to acquire up to 26 per cent stake in Ambuja Cements at ₹385 per share.

The open offer, which will come into effect after getting the necessary approvals, has been triggered due to the execution of a share purchase agreement between the Adani Group and Holderfin B.V, a company incorporated in the Netherlands, for purchase of the latter’s shareholding at ₹50,181 crore.

With the mandatory open offer, Adani Group will buy up to 51.64 crore fully paid-up equity shares of ₹2 each, representing 26 per cent of Ambuja Cements from the public shareholders. The open offer has valued Ambuja Cements’ 84,11,000 holding in ACC at ₹2,300 per share (being the negotiated price for ACC Ltd).

On Sunday, 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 and ACC.

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

The value for the Holcim stake and open offer consideration for Ambuja Cements and ACC is about $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 completion of the underlying transaction under the share purchase agreement is subject to the receipt of required statutory approval, said Ambuja Cement on Monday. After the completion of deal with Holcim, Endeavour Trade and Investment will indirectly hold 125.31 crore equity shares of Ambuja Cements, and exercise indirect control over ACC Ltd.

Published on May 16, 2022
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