India’s Adani-backed Ambuja boosts cement heft with $295mn deal for Sanghi Industries

BENGALURU: India’s Ambuja Cements said on Thursday it will buy a near 83% stake in smaller rival Sanghi Industries for up to $295 million, closing the Adani Group’s gap on market leader UltraTech at a time of booming demand.

The 24.41 billion rupees deal is the billionaire Gautam Adani-led conglomerate’s first major acquisition since a scathing report by short-seller Hindenburg in January slammed the group shares and led to investigations into the group.

A panel set up by India’s top court has found no lapses.

Ambuja said it will first buy a 56.74% stake in Sanghi Industries for 16.74 billion rupees and then launch an open offer for a further 26% stake at 114.22 rupees per share, a 13.8% premium to the stock’s closing price on Wednesday.

Sanghi Industries’ shares, which have rallied over the last few sessions on talks of the deal, were up nearly 5% at 105.40 rupees.

Ambuja’s shares were up 0.3%.

Last year, Adani Group bought Holcim AG’s cement businesses in India – Ambuja Cements and ACC Ltd – for over $10 billion in its largest-ever acquisition.

Its latest acquisition in the space comes amid strong demand as the government has increased its infrastructure projects and strong residential home sales. The cement sector grew 9.4% in June.

Adani-owned Ambuja Cements to acquire majority stake in India’s Sanghi

The deal, which has an enterprise value of 50 billion rupees, will boost Ambuja Cements’ capacity to 73.6 million tonnes per annum (MTPA) and help it reach its goal of 140 MTPA by 2028 ahead of time, the company said.

Sanghi has a clinker capacity of 6.6 MTPA, cement capacity of 6.1 MTPA and limestone reserves of 1 billion tonnes.

The Adani Group’s combined cement capacity will be 101 MTPA by 2025, still well behind UltraTech’s capacity of 136.65 MTPA.

The deal will be paid for by the company’s funds generated by the company from its business operations, Ambuja said.