Ambuja, ACC stocks rise as Adani to buy Holcim's entire stake in cement makers

New Delhi, May 16

Shares of cement makers Ambuja Cements and ACC rose on Monday after Adani Group announced that it would buy Switzerland-based Holcim Ltd's entire stake in the leading Indian cement companies.

The share of the cement makers closed Monday's trade 2.3 per cent and 3.8 per cent higher, respectively, from their previous close.

On Sunday, Adani Group, through an offshore special purpose vehicle, announced that it had entered into definitive agreements for the acquisition of Switzerland-based Holcim's stake in the two companies.

Holcim, through its subsidiaries, holds 63.19 per cent in Ambuja Cements and 54.53 per cent in ACC (of which 50.05 per cent is held through Ambuja Cements).

The value for the Holcim stake and open offer consideration for Ambuja Cements and ACC is $10.5 billion, which makes this the largest ever acquisition by Adani, and India's largest ever merger and acquisition (M&A) transaction in the infrastructure and materials space.

"Our move into the cement business is yet another validation of our belief in our nation's growth story," said Adani Group Chairman Gautam Adani post the announcement of the stake purchase.

With India's cement consumption at just 242 kg per capita, as compared to the global average of 525 kg per capita, there is significant potential for the growth of the cement sector in India.

The tailwinds of rapid urbanisation, the growing middle class and affordable housing together with the post-pandemic recovery in construction and other infrastructure sectors are expected to continue driving the growth of the cement sector over the next several decades.

Ambuja Cements and ACC currently have a combined installed production capacity of 70 MTPA.

Both Ambuja and ACC will benefit from synergies with the integrated Adani infrastructure platform, especially in the areas of raw material, renewable power and logistics, where Adani group companies have vast experience and expertise.

The acquisition is, however, subject to regulatory approvals and conditions.