Ambuja, ACC gain up to 6% on Adani Group's buyout of Holcims's India biz

Shares of Ambuja Cement and ACC rallied up to 6 per cent on the BSE in Monday’s intra-day trade after the Adani Group announced the acquisition of Swiss cement major Holcim's stake in all its Indian operating entities for $10.5 billion (around Rs 81,361 crore), including the open offers.

The Adani family, through an offshore special-purpose vehicle, said that it has entered into definitive agreements for the acquisition of 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 in Ambuja Cements and 54.53 per cent in ACC (of which 50.05 per cent is held through Ambuja Cements).

Ambuja Cements and ACC currently have a combined installed production capacity of ~70 MTPA. 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. The companies will also benefit from Adani’s focus on ESG, Circular Economy and Capital Management Philosophy, Adani Group said.

Among the individual stocks, ACC rallied 6 per cent to Rs 2,245.90, while Ambuja Cements rose 3 per cent to Rs 370 on the BSE, as compared to a 0.5 per cent rise in the Sensex, at 09:24 am.

Adani group proposed to acquire up to 48.96 million equity shares representing 26 per cent of total equity capital of ACC at a price of Rs 2,300 per share via an open offer. It will buy 516 million shares or 26 per cent stake of Ambuja Cements at a price of Rs 385 per share.

“As the deal closes, and ACC and Ambuja Cements becomes a direct, and most importantly, identifiable individual promoter-controlled entities and Adani emerges as the second largest player in Indian cement industry, this deal will potentially change the fortune of the sector for a betterment!,” said analysts at Philllip Capital.

Adani Group, all of a sudden, has emerged as the second largest cement producer of the country with its master stroke of buying-out Ambuja Cements and ACC from Holcim. However, to us, this is not just about the buy-out, but Adani, in our view, now has the potential to turnaround the fortune for the whole industry and not just theirs. It has now also become a 70 mn tonnes p.a. capacity player, next only to UltraTech Cement, the brokerage said.