Swiss building materials company Holcim Ltd. has agreed to sell its Indian operations to local billionaire Gautam Adani, currently Asia’s richest man, in another step by Chief Executive Jan Jenisch away from traditional cement.
It will sell its 63% stake in Mumbai-listed Ambuja Cements Ltd. to Adani Group, the company said in a statement on Sunday. Adani said it plans to spend about $10.5 billion to buy equity in Ambuja and related entities and to consider public offerings.
As part of the deal, Adani will inherit Ambuja’s controlling stake in another listed cement maker, ACC Ltd., and buy Holcim’s direct 4.5 percent stake. Holcim expects to receive 6.4 billion Swiss francs ($6.4 billion) in cash from the sale, the statement said.
“We have a lot of businesses we want to acquire, so I think we can put that money to good use,” Janisch said in an interview on Sunday. “Currently, we are processing more than 10 transactions.”
Jenisch joined Holcim from Sika AG in 2017 and has been selling non-core cement businesses and acquiring new construction companies to benefit from the growing demand for energy efficient buildings. As part of his strategy to expand his so-called Solutions and Products division, he spent about $5 billion to acquire Malarkey Roofing Products in December and Firestone Building Products in early 2021.
German, 55, who has been tidying up the company after a mess large merger 2015 Acquisition of Holcim and Lafarge SA in France. Jenisch spun off a Brazilian unit for $1 billion in September and spun off Asian businesses such as Holcim Indonesia in 2019.
Holcim’s sale of its India business (subject to local regulatory approval) is expected to close in the second half of 2022, thanks to the fact that Adani doesn’t have a lot of overlap. Jenisch said the company began reviewing new asset sales last year after the rooftop acquisition and completed negotiations with a handful of potential Indian buyers in about three months.
‘Strength position’
“It’s important to us that we have a strong balance sheet,” he said in an interview, adding that quick completion, the right price and the right selection were key to selecting the winning bidder. “It’s always wise to be in a position of strength and have the opportunity to make a deal and not think, oh, how can I raise this money.”
For Adani, the deal gives Asia’s richest man a foothold in the subcontinent’s fragmented cement industry. His group has beaten other local companies including JSW Group, according to people familiar with the matter.Bloomberg News previously reported Adani Group is in advanced talks with Holcim.
According to a statement on Sunday, Adani Group bought Ambuja Cement at Rs 385 per share, a 7.2% premium to Friday’s closing price. It will buy ACC for Rs 2,300 per share.
Shares in Ambuja Cements were up 3.5% in Mumbai trade in early trade on Monday, while ACC shares were up 7%.
The group has moved beyond its core business of operating ports, power plants, coal mines and renewable energy into data centres, airports, digital services, retail and media.
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A first-generation entrepreneur with a net worth of about $100 billion, according to the Bloomberg Billionaires Index, Adani has been looking to turn his company into a multi-millionaire business like Mukesh Ambani’s Reliance Industries Ltd. Industry giants. beyond Earlier this year, Ambani became the richest man in Asia and India.
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Adani’s motivation
The Ambuja deal will transform Adani Group into a large player in the cement industry. Established in 1983, Ambuja has a cement production capacity of 31 million tons and has 6 integrated manufacturing plants and 8 cement grinding units in India. website show.
“Our foray into the cement business is another validation of our belief in the nation’s growth story,” Adani, chairman of his namesake group, said in a statement on Sunday.
Adani Enterprises Ltd., the flagship company of the Adani Group, owns two cement subsidiaries. Adani Cementation Ltd. plans to build a complex in Gujarat, according to a November compliance report.group established Adani Cement Industries Ltd., June 2021.
Barclays, Deutsche Bank and Standard Chartered worked with Adani on the deal. Holcim led the transaction, with its in-house deal team backed by BNP Paribas, JPMorgan and Perella Weinberg Partners.
