Adani Cement’s cement and building material subsidiary, Ambuja Cements, is a member of the diverse Adani Group. It runs 21 grinding units, 10 bulk cement terminals, and 22 integrated cement plants throughout India. Orient Cement is distributed throughout ten Indian states and operates three production facilities in Telangana, Karnataka, and Maharashtra.
Billionaire Gautam Adani’s Ambuja Cements Ltd. has requested permission from the Competition Commission of India (CCI) to acquire the majority of Orient Cement Ltd., a company owned by the CK Birla Group, in a transaction valued at Rs 8,100 crore.
A CCI notice states that the proposed transaction is a two-phase acquisition process that will see Ambuja Cements first acquiring a 46.8% stake in Orient Cement through two share purchase agreements (SPAs) on October 22, 2024. This comprises an additional 8.9% from specific public shareholders and a 37.9% stake from the current promoter group. Ambuja Cements’ stake will be 72.8% if the open offer is fully accepted, according to a notice submitted to the CCI on Friday.
The notice states that under SEBI’s SAST (Substantial Acquisition of Shares and Takeovers) rules, the purchase of shares “triggers an obligation on the acquirer to make an open offer for the acquisition of up to 26% of the expanded share capital of the target (open offer)”.
In October, the Adani Group declared that it had signed a binding agreement to purchase Orient Cement for Rs 8,100 crore in equity. Through the acquisition, Adani Cement, which presently works in the sector through Ambuja Cements, will increase its capacity by 16.6 MTPA (million tons per annum). The proposed acquisition of Orient Cement by Ambuja Cements, according to the company, does not raise any competition issues, giving the CCI the freedom to maintain open market definitions.
However, CCI has identified two pertinent markets for its evaluation: a broader market that encompasses the production and distribution of grey cement in Telangana, Maharashtra, Karnataka, Madhya Pradesh, and Gujarat, and a more focused market that is limited to Telangana, Maharashtra, and Karnataka.
The stock of Ambuja Cements Ltd. is currently trading at Rs. 558.20 per share, slightly lower than its peak trading price of Rs. 565.50.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
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