The Business Bytes
TBB BUREAU
BHUBANESWAR, MAY 15, 2022
Gautam Adani-led Adani group on Sunday announced that it would acquire Swiss cement major Holcim’s stake in Ambuja Cements and its subsidiary ACC for $10.5 billion which is considered as the largest ever acquisition in India.
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 ofIndia’s leading cement companies – Ambuja Cements Ltd and ACC Ltd.
The group outbid Ultratech and JSW group to enter the cement industry and also emerged as the country’s second-largest cement manufacturer, with 70 million tonnes of capacity annually.
Holcim owns 63.19 per cent in Ambuja Cement and 4.48 per cent in ACC. Ambuja Cement, in turn, owns 50.05 per cent in ACC. The Adani family will make an open offer to buy 26 per cent in these two companies from non-promoter shareholders, as per market regulator, the Sebi’s norms.
“Our move into the cement business is yet another validation of our belief in our nation’s growth story,” said Gautam Adani, Chairman of the Adani Group.
“Not only is India expected to remain one of the world’s largest demand-driven economies for several decades, India 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 businessesthat 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,” he added.
“Holcim’s global leadership in cement production and sustainabilitybest practices brings to us some of the cutting-edge technologiesthat will allow us to accelerate the path to greenercement production. In addition, Ambuja Cements and ACC are two of the strongest brands recognized across India. When augmented with our renewable power generation footprint, we gain a big headstart in the decarbonization journey that is a must for cement production.This combination of all our capabilities makes me confident that we will be able to establish the cleanest and most sustainable cement manufacturing processes that will meet or exceed global benchmarks,” Adani further said.
“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. “Mr Gautam Adani is a highly recognized business leader in India who shares our deep commitment to sustainability, people and communities. 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.”
With India’s cement consumption at just 242kg per capita, as compared to the global average of 525kg per capita, there is significant potential for the growth of the cement sectorin India. The tailwinds of rapid urbanization, the growing middle class and affordable housing together with the post-pandemic recovery in constructionand other infrastructure sectors are expected to continue driving the growth of the cement sector over the next several decades.
Ambuja Cements and ACC currently have acombined installed production capacity of 70 MTPA. The two companies are among the strongest brands in India with immense depth of manufacturing and supplychain infrastructure, represented by their 23 cement plants, 14 grinding stations, 80 ready-mix concrete plants and over 50,000 channel partners across India.
The acquisition is subject to regulatory approvals and conditions.
