Shares of ACC and Ambuja Cements surged up to 11% in intraday trade on Monday after billionaire Gautam Adani-led Adani Group completed the acquisition of Swiss firm Holcim’s stake in these two listed cement companies. The market sentiment was also boosted after Gautam Adani took over as chairman of Ambuja Cements’ board, while his elder son Karan was appointed chairman and non-executive director at ACC.
The value of the Holcim stake and open offer consideration for Ambuja Cements and ACC is $6.50 billion (about ₹51,800 crore), which makes this the largest ever acquisition by Adani, and also India’s largest ever M&A transaction in the infrastructure and materials space. Post the transaction, Adani will hold 63.15% in Ambuja Cements and 56.69% in ACC (of which 50.05% is held through Ambuja Cements). Following the acquisition, Adani has now become India’s second largest cement manufacturer with capacity of 67.5 MTPA.
In a separate development, the board of Ambuja Cements has also approved an infusion of ₹20,000 crore into Ambuja by way of preferential allotment of warrants. The company intends to use fund proceeds to create additional capacity with the aim to become India’s biggest cement player by 2030.
Cheering the news, shares of Ambuja Cements rallied as much as 10.8% to hit a fresh all-time high of ₹572, driven by strong volume trade. The counter saw a surge in buying activities as 24.5 lakh shares worth ₹133 crore changed hands on the BSE, against the two-week average volume of 11.75 lakh scrips. The share price of cement major has risen 109% in the past six months, from its 52-week low of ₹274 touched on March 8, 2022. The combined market capitalisation of Ambuja Cements and ACC is ₹1.62 lakh crore as on date.
Similarly, ACC shares gained 4.07% to touch day’s high of ₹2,721.35, against the previous closing price of ₹2,614.80 on the BSE. Last week, the largcap stock touched its 52-week high of ₹2,784.95 on September 14, after the Adani Group launched its open offer to acquire 26% additional stake in the company from Swiss firm Holcim. It hit a 52-week low of ₹1,900.50 on March 7, 2022.
In comparison, the BSE Sensex gained 437 points, or 0.7%, in intraday to 59,278 levels during the session so far.
Both ACC and Ambuja Cements trade higher than their 5-day, 20-day, 50-day, 100-day, and 200-day moving averages. In the last one year, shares of Ambuja Cements have risen 32%, while ACC have delivered 9% returns to its shareholders. However, the stocks have gathered momentum in the last few months, with ACC and Ambuja rising 15% and 37%, respectively, in the past one month. In comparison, 30-share Sensex climbed 0.6% during the same period.
Last month, the Adani family launched its ₹31,000 crore open offer to acquire 26% additional stake in ACC and Ambuja Cements from its parent entity, Holcim. As per the open offer filed with exchanges, the Adani Group acquired around 4.89 crore equity shares of ACC from public shareholders for ₹11,259.97 crore and 51.63 crore equity shares of Ambuja Cements for ₹19,879.57 crore. The open offer, which closed on Friday, received a lacklustre response from public shareholders.
The open offer was triggered after the Adani family in May this year signed a deal to acquire Holcim’s entire stake in ACC and Ambuja Cements for around $10.5 billion. Holcim, through its subsidiaries, owned 63.19% in Ambuja Cements and 54.53% in ACC - of which 50.05% were held through Ambuja Cements. The transaction was financed by facilities aggregating to $4.50 billion availed from 14 international banks.
Currently, Ambuja Cements and ACC have a combined installed production capacity of 67.5 MTPA. The two companies are among the strongest brands in India with immense depth of manufacturing and supply chain infrastructure, represented by their 14 integrated units, 16 grinding units, 79 ready-mix concrete plants, and over 78,000 channel partners across India.