Holcim, the world's largest cement maker, has said that the sale of its Indian businesses – Ambuja Cements Ltd. and ACC Ltd. – doesn't entail any tax liability.

There will be no indemnity or tax liability for the Switzerland-based cement manufacturer in its $6.4 billion deal to sell its stake in Ambuja Cement and ACC to the Adani family, Jan Jenisch, chief executive officer of Holcim, says in an analyst call.

"Our analysis comes to the conclusion that there's no capital tax gain, or any other tax to be paid for this transaction," says Jenisch.

The Adani family will acquire Holcim's entire stake in ACC and Ambuja Cements through an offshore special purpose vehicle.

The Holcim chief further says that there will be no indemnity from the deal. "We have sold the company with no indemnification and no warranties. It's a straightforward sale of the shares, with no further indemnification from our side," says Jenisch.

The two cement makers were fined for price cartelisation along with other cement companies in a 2016 probe by the country's antitrust watchdog, the Competition Commission of India (CCI).

The competition regulator had imposed a penalty of ₹6,300 crore on 11 cement manufacturers. Ambuja Cements is liable to pay ₹1,164 crore, while ACC's liability stands at ₹1,148 crore. Ambuja Cements and ACC are currently fighting this case in the Supreme Court.

Holcim, through its subsidiaries, holds 63.19% in Ambuja Cements and 54.53% in ACC - of which 50.05% is held through Ambuja Cements.

Speaking on why Adani was chosen for the deal, Jenisch says the company considered the smooth execution of the sale process. "It is not in our interest here to engage maybe with very competitive companies and then you are hanging in there and you have a very lengthy process. So that was of course another consideration for us. And we are happy that we found a solution where we could get the smoothest possible execution of this agreement," says Jensich.

The value for the Holcim stake and open offer consideration for Ambuja Cements and ACC is around $10.5 billion, making this the largest ever acquisition by Adani.

Ambuja Cements and ACC currently have a combined installed production capacity of around 70 million tonnes per annum (MTPA). The two companies have 23 cement plants, 14 grinding stations, 80 ready-mix concrete plants and over 50,000 channel partners across India.

The deal will also be India's largest ever M&A transaction in the infrastructure and materials space. 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.

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