Adani to become India's No. 2 cement maker with $10.5 billion Holcim deal

Indian conglomerateAdaniGroup 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.

AdaniGroup, owned by billionaire GautamAdani, currently has no cement-making operations but said the firms were a good fit given its ports and logistics, energy and real estate businesses.

Under the deal,AdaniGroup will pay $6.4 billion in cash to acquire Switzerland-based Holcim's 63.1 per centstake in Ambuja Cements Ltd and 54.5 per centholding 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,Adanisaid 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,"Adanisaid.

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 per centto 377.70 rupees while ACC rose 8.3 per centto a high of 2,287.70 rupees on Monday, but traded below the prices offered byAdani.

Ambuja's shares closed 2.5 per centhigher at 368 rupees compared with the offer price of 385 rupees. ACC's shares ended Monday 3.9 per centhigher at 2,196.20 rupees versus the offer price of 2,300 rupees.

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GautamAdani, Asia's richest man, plans to fund the deal using an offshore special purpose vehicle owned by theAdanifamily, 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 theAdanifamily," 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 (ESG) credentials.

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 people.

The transaction is expected to close in the second half of 2022, Holcim said.

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