Adani Group Cement Arm To Acquire Orient Cement To Boost Footprint
Ambuja Cements will buy 46.8% stake in Orient Cement from its promoters and some public shareholders, and also make open offer to acquire 26% stake
(The Corner Office Journal) -- Ambuja Cements Ltd., a part of Adani Group, agreed to acquire Orient Cement Ltd. (OCL) at an equity value of 8,100 crore rupees ($963 million) to boost its footprint in India’s cement manufacturing market.
The cement and building material company of Adani Cement signed an agreement to acquire 7.76 crore Orient Cement shares, or a 37.9% stake in the company, from its promoters CK Birla Group at 395.40 rupees apiece, Ambuja Cements said in a stock exchange announcement.
Ambuja Cements also agreed to buy 1.82 crore Orient Cement shares, or an 8.9% stake, in the company, from certain public shareholders at 395.40 per share.
In addition, Ambuja Cements will make an open offer to acquire up to 5.34 crore Orient Cement shares, or a 26% stake in the company, from the public shareholders at the similar price.
The acquisition will be fully funded through internal accruals.
DEAL RATIONALE
Orient Cement has an existing 5.6 million tons per annum (MTPA) clinker capacity and 8.5 MTPA cement capacity along with statutory clearance to increase the clinker capacity by another six MTPA and cement capacity by another 8.1 MTPA.
In addition, Orient Cement also has a limestone mining lease in Chittorgarh for setting up an integrated unit with clinker of four MTPA and a split grinding unit of six MTPA in north India. It has also secured a concession from Madhya Pradesh Power Generating Company Ltd. for setting up a grinding unit within the premises of Satpura Thermal Power Plant.
Orient Cement also has a 95-megawatt captive power plant, 10-megawatt waste heat recovery system, 33-megawtt renewable energy spread across the states of Telangana, Karnataka and Maharashtra.
Ambuja Cements said the acquisition of Orient Cement complements the company’s existing cement footprint, reducing overall lead distances and logistics costs for the cement business and improving market share in our core markets.
“The acquisition will help to expand Adani Cement’s presence in core markets and improve its pan-India market share by 2%,” Karan Adani, director at Ambuja Cements. “By acquiring OCL, Ambuja is poised to reach 100 MTPA cement capacity in FY25.”
The acquisition, which will likely to close within four months, is subject to approval of the Competition Commission of India.
Note: $1 = 84.0810 Indian rupees
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