ACC, Ambuja Cements rise up to 5%; here’s why

Shares of ACC and Ambuja Cements continued their gaining streak on Wednesday and rose up to 5%, in an otherwise weak broader market, amid an open offer by Adani Group. Billionaire Gautam Adani-led conglomerate on August 26 launched its ₹31,000 crore open offer to acquire 26% additional stake in Swiss firm Holcim's two Indian listed entities ACC and Ambuja Cements. The scheme to buy the stake from the public shareholders will end on September 9.

Ambuja Cements share price opened higher for the fourth consecutive session and rallied as much as 4.64% to hit a new all-time high of ₹457.5 on the BSE. The counter has gained 11.5% in the last four trading days and nearly 19% in one month. The large cap stock has rallied 67% in the last six months, from its 52-week low of ₹274 on March 3, 2022. In the past one year, the stock delivered a muted return of 3%, while it soared 20% on a year-to-date basis.

Similarly, ACC shares rose for the second day and gained 4.7% to hit an intraday high of ₹2,446.10 during the trade so far. The stock opened lower at ₹2,320.10, against the previous closing price of ₹2,336.20 on the BSE. The stock trades 5.5% lower than its 52-week high of ₹2,587.95 touched on November 15, 2021. The counter hit its 52-week low of ₹1,900.50 on March 7, 2022.

In comparison, the BSE benchmark Sensex was trading 411 points lower at 58,785 levels, following weak cues from global peers.

Adani Group will buy 26% stake each in Holcim's two Indian listed entities, through Endeavour Trade and Investment Ltd, a company incorporated in Mauritius by the Adani group, at an open offer at a price of ₹385 per share for Ambuja Cements and ₹2,300 per share for ACC. The scheme had been approved by capital market regulator SEBI last month.

In May this year, the Adani family had entered into definitive agreements for the acquisition of Holcim’s entire stake in ACC and Ambuja Cements for around $10.5 billion, making this the largest ever acquisition by Adani, and India’s largest ever M&A transaction in the infrastructure and materials space. Holcim, through its subsidiaries, holds 63.19% in Ambuja Cements and 54.53% in ACC - of which 50.05% is held through Ambuja Cements.

The open offer has been triggered after the execution of the share purchase agreement between the Adani family and Holcim to buy a majority stake in the Indian cement business of the Swiss giant. As per the open offer filed with exchanges, the Adani Group will acquire up to 4.89 crore equity shares of ACC for ₹11,259.97 crore and 51.63 crore equity shares of Ambuja Cements for total consideration of ₹19,879.57 crore.

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. Post acquisition, the Adani group will become India’s second-largest cement producer after Ultratech Cement, which is owned by the Aditya Birla Group.