The Adani Group led by billionaire Gautam Adani has entered into definitive agreements to take over Switzerland-based Holcim’s listed cement assets in India, ACC and Ambuja, for $10.5 billion to become the second-largest cement maker in the country in one shot — with a combined pan-India capacity of 70 million tonnes per annum in the highly competitive, fragmented and price sensitive market. The transaction is India’s largest M&A deal in the infrastructure and materials space.
Aditya Birla Group’s UltraTech is the largest cement company in India with a capacity of 117 mtpa. Adani has pipped Sajjan Jindal-led JSW Cement, believed to be the other serious contender.
The deal to acquire a 63.19% stake in Ambuja Cements will give the Indian conglomerate control over ACC, another listed cement company, a subsidiary of Ambuja Cements. Agencies reported that Adani's $10.5 billion acquisition would mean its purchase price is pegged at ₹385 per share for Ambuja Cements, a 7.2% premium to Friday’s closing price. The acquirer will pay ₹2,300 per share for ACC.
Adani will use a family-owned entity based in Dubai, as the principal vehicle for the transaction. This entity will float a special purpose vehicle where the Adani family, as promoters, will infuse $1.25- 1.5 billion as equity. A similar amount, likely in the form of structured equity, is expected from the Middle East investor group the Adani family is engaged with. Together, this vehicle will be capitalised to the tune of $3 billion. This approximately $3 billion in turn will become the equity of another dropdown SPV in which global banks, such Deutsche Bank, Barclays and Standard Chartered Bank, are expected to lead the funding of another $4.5 billion as acquisition financing. Adani is expected to provide letter of comfort to the banks as well if the need arises. Besides the three, other banks will join the financing consortium subsequently for share financing.