Billionaire Gautam Adani's conglomerate plans to buy Switzerland-based Holcim AG's cement businesses in India for $10.5 billion, becoming the country's No. 2 cement manufacturer in its largest-ever acquisition.
Under the deal, the biggest in India since 2018, Adani Group will pay $6.4 billion in cash to acquire Holcim's 63.1% stake in Ambuja Cements Ltd and 54.5% holding in ACC Ltd . The rest of the companies' shares will be bought via an open offer.
Adani Group, which currently has no cement-making operations, said the firms were a good fit given its ports and logistics, energy and real estate businesses.
"(We) will be able to build a uniquely integrated and differentiated business model and set ourselves up for significant capacity expansion," it said in a statement on Sunday.
Shares in Ambuja and ACC surged but were trading below the prices offered by Adani on Monday.
By midday, Ambuja's stock was up 2.9% at 369.45 rupees compared with the offer price of 385 rupees. ACC's shares jumped 3.6% to 2,190 rupees versus the offer price of 2,300 rupees.
Gautam Adani, Asia's richest man, plans to fund the deal using an offshore special purpose vehicle owned the Adani family, 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 the Adani family," he was quoted as saying.
The divestment by Switzerland-based Holcim marks its 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 and also exited Indonesia last year.
The deal, which was clinched after a fierce bidding war with the JSW Group and industry leader Ultratech Cement Ltd , is the largest deal in India since Walmart's acquisition of a majority stake in retailer Flipkart for roughly $16 billion in 2018.
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.
($1 = 77.7140 Indian rupees)
(Reporting by Mrinmay Dey in Bengaluru, Rajendra Jadhav, Rupam Jain in Mumbai, John Revill in Zurich; Writing and additional reporting by Sudarshan Varadhan; Editing by Emelia Sithole-Matarise and Edwina Gibbs)