Gautam Adani’s biggest M&A: Acquires Ambuja Cement, ACC from Holcim for $10.5 bn

Billionaire businessman Gautam Adani has won Holcim’s listed cement assets in India, ACC and Ambuja for a little over $10 billion, the company announced on Sunday. Post regulatory approval for the deal, it stands to become the second-largest cement maker in the country in one shot- with a combined pan India capacity of 66 million tonnes per annum (mtpa) in the highly competitive, fragmented and price-sensitive market.

The value for the Holcim stake and open offer consideration for Ambuja Cements and ACC is around US$ 10.5 billion, which makes this the largest ever acquisition by Adani, and India’s largest-ever M&A transaction in the infrastructure and materials space, the company said in a press release.
"Our move into the cement business is yet another validation of our belief in our nation's growth story," said Adani, Chairman of the Adani Group.

Adani has pipped Sajjan Jindal-led JSW Cement, the other serious contender for the cement assets.

“I am delighted that the Adani Group is acquiring our business in India to lead its next era of growth,” said Jan Jenisch, CEO of Holcim Limited. “Mr. Gautam Adani is a highly recognized business leader in India who shares our deep commitment to sustainability, people and communities," he added.
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, according to the press release.

Holcim’s flagship entity in India is Ambuja Cement where, as promoters, it owns 63.1% via Holderind Investments Limited. Ambuja Cement in turn owns 50.05% of ACC Ltd. Holderind Investment (Holcim) owns another 4.48% in ACC directly. Since 2018, Holcim has tried to streamline operations by merging the two operations for maximum cost and operational efficiencies, but that process is still incomplete.

Adani is being financed by Deutsche Bank, Barclays and Standard Chartered Bank. DB is also advising the Adani Group. ICICI Securities was the advisor to Adani for the Holcim transaction and is also the lead manager to the open offer.

This entity will float a special purpose vehicle (SPV) where the Adani family, as promoters, will infuse $1.25 billion-$1.5 billion as equity. A similar amount, likely in the form of structured equity, is expected from the Middle East investor group the Adani family is engaged with. Together, this vehicle will be capitalised to the tune of $3 billion.

This approximately $3 billion in turn will become the equity of another drop-down SPV in which global banks, such Deutsche Bank, Barclays, and Standard Chartered Bank, are expected to lead the funding of another $4.5 billion as acquisition financing. Adani is expected to provide a letter of comfort to the banks if the need arises. Besides the three, other banks will join the financing consortium subsequently for share financing.

“The offshore structure is perhaps what tilted the deal in their favour,” an official in the know told ET.

Switzerland-based Holcim, which globally merged with French rival Lafarge in 2015 to create a mega entity Lafarge Holcim – a European cement and buildings material giant -- was forced to go through several restructurings to comply with anti-trust regulators around the world, by divesting assets across Europe and Asia, including India. The combined entity has since been rebranded as Holcim Group.