Billionaire Gautam Adani has won Holcim's listed cement assets in India, ACC and Ambuja, for a little over $10 billion, the company announced on Sunday. After the regulatory approval for the deal, it has become the second largest cement manufacturer in the country at one go with a combined pan-India capacity of 66 million tonnes per annum (mtpa) in the highly competitive, fragmented and value-sensitive market.
The consideration for Holcim stake and open offer for Ambuja Cements and ACC is valued at about USD 10.5 billion, the company said in a statement, This is the largest acquisition by Adani so far and the largest M&A transaction by India in the infrastructure and material space ever. Press release.
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"Our move in cement business is yet another reaffirmation of our faith in the country's growth story," Adani Group Chairman Adani said."
Our belief in the India story is unshakeable. Combining @Holcim's cement assets in India with our green energy and logistics will make us the world's greenest cement company. Jan Jenisch has been terrific to work with. We welcome the @AmbujaCementACL & @ACCLimited teams. pic.twitter.com/iThyLp92iV
— Gautam Adani (@gautam_adani) May 15, 2022
Adani has overtaken Sajjan Jindal-led JSW Cement, which is the second serious contender for cement assets.
Jane Jennish, CEO, Holcim Ltd, "I am delighted that the Adani Group is acquiring our business in India to lead the next era of its growth," he added.", Shri Gautam Adani is a highly recognisable business leader in India, Whose stability, Sharing our deep commitment to people and communities.
According to the press release, the cement consumption in India is only 242 kg per capita as compared to the global average of 525 kg per capita.
Holcim's principal unit in India is Ambuja Cements, where as a promoter, it owns 63.1% through Holderind Investments Ltd. Ambuja Cements holds 50.05% stake in ACC Ltd. Holding Investments (Holcim) holds 4.48% stake in ACC directly. Since 2018, Holcim has tried to streamline operations by merging the two operations for maximum cost and operational efficiency, but the process is still incomplete.
Adani is being funded by Deutsche Bank, Barclays and Standard Chartered Bank. DB is also advising the Adani group. ICICI Securities was the advisor to Adani for the Holcim transaction and also the principal manager of the open offer.
The entity will operate a special purpose vehicle (SPV) where the Adani family, as the promoter, will invest $1.25 billion-$1.5 billion in equity. The Adani family, which is associated with the Middle East investor group, is also expected to have similar amounts in the form of structured equity. Overall, the vehicle will have a capitalization of $3 billion.
This will in turn become another drop-down SPV equity in which global banks, such as Deutsche Bank, Barclays and Standard Chartered Bank, are expected to lead the $4.5 billion funding in the form of acquisition financing.
This will in turn become another drop-down SPV equity in which global banks, such as Deutsche Bank, Barclays and Standard Chartered Bank, are expected to lead the $4.5 billion funding in the form of acquisition financing. It is expected that Adani will provide letter of comfort to the banks, if required. Apart from the three, other banks will join the consortium later in the day for share financing.
"The offshore structure may have tilted the deal in their favour," an official familiar with the matter told ET.'
The Swiss-based Holcim, which merged with French rival Lafarge in 2015 to create a mega.
Holcim, Switzerland, This led to a mega building material joint, globally merging with French rival Lafarge in 2015 - dividing assets in Europe and Asia, Anti-trust regulators around the world were forced through several restructurings to comply India. The combined entity has since been rebranded as Holcim Group.