Adani-owned Ambuja Cements on Tuesday announced that it has signed a binding agreement for the acquisition of Orient Cement Ltd (OCL) at an equity value of Rs 8,100 crore. Ambuja will acquire 46.8 per cent shares of OCL from its current promoters and certain public shareholders and the acquisition will be fully funded through internal accruals, it said.
Ambuja Cements will purchase a 46.8 per cent stake in OCL from its existing promoters and select public shareholders for Rs 395.40 per share. The company is acquiring the stake at a 12 per cent premium to the last closing price. Additionally, it will make an open offer for an additional 26 per cent at Rs 395.40 to the shareholders of Orient Cement.
Karan Adani, Director of Ambuja Cements, said, “This timed acquisition marks another significant step forward in Ambuja Cements’ accelerated growth journey, increasing cement capacity by ~30 MTPA within two years of Ambuja’s acquisition.”
The acquisition will help Ambuja Cements reach 100 MTPA cement capacity in FY25 and increase its presence by 8.5 MTPA in the core market of South & West India. It will also help Ambuja Cements to improve its pan-India market share by 2 per cent. OCL also has additional 8.1 MTPA capacities which are in the Ready to Execute phase and construction can be started immediately. “OCL’s assets are highly efficient, equipped with railway sidings and well supported by captive power plants, renewable energy, WHRS and AFR facilities. OCL’s strategic locations, high-quality limestone reserves and requisite statutory approvals present an opportunity to increase cement capacity in the near term to 16.6 MTPA,” Karan Adani added.
CK Birla, Chairman of Orient Cement and the CK Birla Group, said, “The CK Birla Group is continuously reallocating capital to sharpen its focus on consumer centric, technology driven and service-based businesses. I take pride in Orient Cement’s impressive track record of building premium brands and maintaining a leading market share in the geographies it operates in. We are confident that the Adani Group, with its strong focus on cement and infrastructure, is the ideal new owner to drive continued growth at Orient Cement for our people and stakeholders”.
Amita Birla, Co-Chairman, CK Birla Group, added, “Orient Cement has a strong market presence, with sustainability initiatives, particularly in renewable energy, being a significant part of its DNA. I am convinced that Ambuja Cements is the right home for all our colleagues at Orient Cement, as well as our customers.”
OCL has 5.6 MTPA clinker capacity and 8.5 MTPA cement capacity along with statutory clearance to increase the clinker capacity by another 6.0 MTPA and cement capacity by another 8.1 MTPA. In addition, OCL also has a limestone mining lease in Chittorgarh for setting up an Integrated Unit (IU) with clinker of 4 MTPA and a split Grinding Unit (GU) of 6 MTPA in North India. OCL has also secured a concession from MPPGCL, Madhya Pradesh for setting up a Grinding Unit within the premises of Satpura Thermal Power Plant. Both these complement the Adani Group’s existing cement footprint. OCL has recently commissioned a WHRS in Chittapur IU and is in the final stage of commissioning 16 MW solar in Chittapur and 3.7 MW solar in Jalgaon.
Ambuja plans to optimize OCL’s overall capacity utilization to enhance its cost and competitiveness and improve its operating performance while leveraging the synergies inherent in the existing cement business.
The acquisition will also strengthen the balance sheet of Orient Cement.
From: financialexpress
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