Adani becomes India’s second largest cement player

17 September, 2022 | Pranay Lad

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The Adani Family has successfully acquired Ambuja Cements Ltd and ACC Ltd through Endeavour Trade and Investment Ltd (“BidCo”), a special purpose corporation. The deal included the purc...

The Adani Family has successfully acquired Ambuja Cements Ltd and ACC Ltd through Endeavour Trade and Investment Ltd (“BidCo”), a special purpose corporation.

The deal included the purchase of Holcim’s shares in Ambuja and ACC as well as an open offer for both companies in accordance with SEBI regulations. The biggest acquisition in India’s materials and infrastructure sector was valued at USD 6.50 billion. Following the purchase, Adani would own 56.69% of ACC and 63.15% of Ambuja Cements (of which 50.05 per cent is held through Ambuja Cements).

Ambuja Cements and ACC currently have a combined market value of USD 19 billion. Adani is currently India’s second-largest cement manufacturer as a result of this acquisition (capacity 67.5 MTPA) improved corporate governance, with 100% independent directors serving on the audit and compensation committees. Corporate Responsibility Committee and Public Consumer Committee, two new Board committees that will only consist of independent directors, will advance ESG assurance and a consumer-first strategy.

With a combined value of USD 6.50 billion for Holcim holding an open offer consideration for Ambuja Cements and ACC, this is not only Adani’s largest acquisition to date but also the largest M&A deal in India’s history in the infrastructure and materials sector. Following the purchase, Adani would own 56.69% of ACC and 63.15% of Ambuja Cements (of which 50.05 per cent is held through Ambuja Cements).

According to Gautam Adani, Chairman of the Adani Group, “What makes cement an attractive company is the headroom for expansion in India, which exceeds that of every other country well beyond 2050.”

“The cost of energy, shipping, and distribution, as well as the capacity to use a digital platform to alter production and significantly improve supply chain efficiencies, all play a role in the economics of cement. Since each of these competencies is one of our core businesses, they offer our cement business a set of unrivalled adjacencies. These relationships are ultimate what fuel competitive economy. Additionally, we will be able to produce premium quality green cement in accordance with the principles of a circular economy thanks to our position as one of the largest renewable energy firms in the world. We are on course to surpass all competitors as the largest and most productive cement company by the year 2030 based on these metrics.”

The installed production capacity of Ambuja Cements and ACC is now 67.5 MTPA. With a vast depth of manufacturing and supply chain infrastructure, the two businesses rank among the strongest in India. They have 14 integrated units, 16 grinding units, 79 ready-mix concrete plants, and more than 78,000 channel partners spread out across the country.

The Board of Ambuja Cements gave its approval for a 20,000 crore rupee (INR) investment into Ambuja through the preferential allocation of warrants. This will enable Ambuja to seize the market’s expansion. According to the corporate ethos of the Adani Group, the steps will greatly speed up value creation for all stakeholders.

Synergies with the complete Adani infrastructure platform will be advantageous for Ambuja Cements and ACC, particularly in the areas of raw materials, renewable energy, and logistics, where Adani Portfolio firms have extensive experience and in-depth knowledge. Adani’s emphasis on ESG, the circular economy, and capital management philosophy will be advantageous to Ambuja and ACC as well. With an emphasis on SDG 6 (Clean Water and Sanitation), SDG 7 (Affordable and Clean Energy), SDG 11 (Sustainable Cities and Communities), and SDG 13, the businesses will continue to be closely aligned with the UN Sustainable Development Goals (Climate Action).

The board committees of Ambuja Cements and ACC have both been reorganised in accordance with the governance philosophy of the Adani Portfolio. Directors who are entirely independent now make up the Audit Committee and the Nomination & Remuneration Committee. In order to assure the board of directors of ESG obligations and increase customer satisfaction, two new committees have been formed: the Public Consumer Committee and the Corporate Responsibility Committee, both of which are composed of 100% independent directors. In order to improve risk management, a Commodity Price Committee made up of 50% independent directors has also been established.

Facilities of USD 4.50 billion were obtained from 14 foreign banks to fund the deal. As originally mandated lead arrangers and book runners for the transaction, Barclays Bank PLC, Deutsche Bank AG, and Standard Chartered Bank participated. As the transaction’s Mandated Lead Arranger and Bookrunners, Barclays Bank PLC, DBS Bank, Deutsche Bank AG, MUFG Bank, and Standard Chartered Bank participated. As mandated lead arrangers for the transaction, BNP Paribas, Citibank, Emirates NBD Bank, First Abu Dhabi Bank, ING Bank, Intesa Sanpaolo S.p.A, Mizuho Bank, Sumitomo Mitsui Banking Corporation, and Qatar National Bank also participated.

In addition to Standard Chartered Bank serving as the open offer’s structuring advisor, Barclays Bank PLC and Deutsche Bank AG served as merchant bankers for BidCo’s open offer to acquire Ambuja Cements and ACC.
BidCo received M&A legal guidance from Cyril Amarchand Mangaldas and Latham and Watkins LLP.

With Allen & Overy LLP and Talwar Thakore and Associates serving as legal counsel to the lenders, Cyril Amarchand Mangaldas and Latham and Watkins LLP served as legal counsel to BidCo for the financing.

The Adani Group, with its headquarters in Ahmedabad, India, has interests in a variety of industries, including logistics (seaports, airports, logistics, shipping, and rail), resources, power generation and distribution, renewable energy, gas, infrastructure, agriculture (commodities, edible oil, food products, cold storage, and grain silos), real estate, public transportation infrastructure, consumer finance, and defence. Adani’s basic values of “Nation Building” and “Growth with Goodness,” which serve as a foundational basis for sustainable growth, are responsible for its success and position as a market leader.

Through its CSR programmes built on the tenets of sustainability, diversity, and shared values, the Group is dedicated to preserving the environment and enhancing communities.

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