May 16 (Reuters) - Indian conglomerate Adani Group plans to
buy Holcim AG's cement businesses in India for $10.5
billion, its largest-ever acquisition, to become the country's
No. 2 cement manufacturer.
Adani Group, owned by billionaire Gautam Adani, currently
has no cement-making operations but said the firms were a good
fit given its ports and logistics, energy and real estate
Under the deal, Adani Group will pay $6.4 billion in cash to
acquire Switzerland-based Holcim's 63.1% stake in Ambuja Cements
Ltd and 54.5% holding in ACC Ltd, Holcim said
in a statement announcing the deal late on Sunday. The rest of
the companies' shares will be bought via an open offer, Adani
said in a separate statement.
"(We) will be able to build a uniquely integrated and
differentiated business model and set ourselves up for
significant capacity expansion," Adani said.
The deal, which was clinched after a fierce bidding war with
the JSW Group and industry leader Ultratech Cement Ltd
, is the second largest deal in India this year.
Shares in Ambuja jumped as much as 5.2% to 377.70 rupees
while ACC rose 8.3% to a high of 2,287.70 rupees on Monday, but
traded below the prices offered by Adani.
Ambuja's shares closed 2.5% higher at 368 rupees compared
with the offer price of 385 rupees. ACC's shares ended Monday
3.9% higher at 2,196.20 rupees versus the offer price of 2,300
Gautam Adani, Asia's richest man, plans to fund the deal
using an offshore special purpose vehicle owned by the Adani
family, he told the Economic Times.
"The acquisition is fully funded by way of approved
commitments from our relationship banks - Barclays, Deutsche
Bank and Standard Chartered Bank - and equity infusion from the
Adani family," he was quoted as saying.
The divestment by Holcim marks the Swiss company's latest
effort to reduce exposure to carbon-intensive cement production
and boost its environmental, social and corporate governance
Holcim has also been selling units outside North America and
Europe in a bid to sharpen its focus on key markets and
diversify into building product areas like roofing. The company
sold its Brazilian operation for $1 billion last year.
Ambuja and ACC combined have the capacity to produce at
least 70 million tonnes of cement annually, while UltraTech
Cement boasts capacity of 120 million tonnes. Together, Ambuja
and ACC own 31 cement making facilities and employ over 10,700
The transaction is expected to close in the second half of
2022, Holcim said.
($1 = 77.7140 Indian rupees)
(Reporting by Mrinmay Dey in Bengaluru, Rajendra Jadhav, Rupam
Jain in Mumbai, John Revill in Zurich; Writing and additional
reporting by Sudarshan Varadhan; Editing by Emelia
Sithole-Matarise, Edwina Gibbs and Susan Fenton)