Adani Group initiates talks to acquire ACC, Ambuja Cement

The Adani Group, helmed by billionaire Gautam Adani, is believed to have initiated discussions with Switzerland-based building materials conglomerate Holcim to acquire its cement businesses in India.

The business conglomerate has also initiated discussions with global lenders including Deutsche Bank and Barclays and domestic banks such as ICICI Bank and Axis Bank for funding the deal. The deal size would be about $10 billion for Holcim’s cement businesses in India, ACC and Ambuja Cement, according to sources close to development.

The talks are in initial stages and the firms haven’t signed exclusivity deals, they said, adding there was no certainty that a deal would be inked.

Ambuja Cement has a market capitalisation of Rs 76,477.13 crore and that of ACC is at Rs 43,389.19 crore, and together the companies’ market cap would be at Rs 1.20 trillion. This would make the deal, if signed, one of the largest in the country.

According to Ambuja Cement’s annual report for FY21, it has an installed capacity of 31.45 million tonne per annum (mtpa) of cement.

The retail segment contributes to about 80% of its sales. On its part, ACC has a production capacity to 34.45 mtpa of cement, and together these companies have a total production capacity of 65.9 mtpa.

The Adani Group, which does not have a presence in the cement sector, is believed to be exploring the sector. The group was planning to set up a 5 mtpa cement manufacturing facility in Raigad district of Maharashtra, with an estimated investment of Rs 1,000 crore.

If Adani Cement succeeds in buying ACC and Ambuja, its total production capacity would rise to 70.9 mtpa.

Holcim, which has been selling off its non-core assets, was looking to sell its businesses in India including its stake in Ambuja Cement, and is in talks with JSW Group and Adani Group. It holds a 63.1% stake in Ambuja and a 4.48% stake in ACC, while Ambuja Cement — Holcim’s flagship entity in India — holds a 50.05% stake in ACC.

JSW Group, which has an installed capacity of 16 mtpa as of March-end and with plans to increase it to 25 mtpa by FY24, is also believed to be in the fray for the acquisition of Holcim’s cement businesses.

In case of JSW Group being the successful bidder to acquire the entire Holcim’s stakes in Ambuja Cement and ACC, its production capacity would only move up to 81.9 mtpa. Despite Adani or JSW Group acquiring Holcim’s cement businesses, Aditya Birla Group’s UltraTech Cement — with production capacity of 120 mtpa – would continue to be the leader in the country.

India is the second-largest cement producer in the world, accounting for about 8% of global cement production with an estimated production capacity of 550 mtpa.