Adani’s Ambuja Acquires Orient Cement For Rs 8,100 Crore To Expand Pan-India Share

Ambuja Cements will see an increase of 16.6 million tonnes in its annual capacity as a result of this acquisition.

Ambuja Cements Ltd., the cement manufacturer owned by the Adani Group, has disclosed the purchase of Orient Cement Ltd. for an equity value of Rs. 8,100 crore as a component of its ongoing growth initiative.

Ambuja Cements announced in a filing on Tuesday that the acquisition would increase its annual capacity by 16.6 million tonnes. The entire cost of this expansion will be covered by internal earnings.

Adani’s cement division, owned by the billionaire Adani, is set to purchase a 46.8% stake from the existing promoters and affiliated entities. This move will subsequently necessitate an open offer to secure a further 26% stake at Rs 395.40 per share.

The statement released by the company highlighted that the purchase of CK Birla Group’s cement division enhances Ambuja’s current presence in the market. This strategic move aims to minimize transportation distances and logistics expenses for the cement sector while also strengthening the company’s market share in key regions.

Acquiring the operational and easily deployable capacity comes at a price of $58 per tonne, which is notably less than the greenfield establishment cost ranging between $110-120 per tonne. Furthermore, the operational capacity is valued at $113 per tonne.

The purchase is anticipated to finalize within a span of three to four months, pending clearance from the competition regulatory body.

Karan Adani, the Director of Ambuja Cements, has confirmed that with the recent acquisition, the company is on track to achieve a cement capacity of 100 MTPA within the ongoing financial year. The move is expected to bolster Adani Cements’ footprint in key markets and enhance its national market share by 2%.

Covering Telangana, Karnataka, and Maharashtra, Orient Cement operates with a total capacity of 8.5 million tonnes annually, including 8.1 MTPA of readily deployable cement capacity.

Ambuja Cements is set to reach a capacity of over 100 MTPA by 2025 and 140 MPTA by 2028, accelerating its growth trajectory.

Sunny Agarwal, head of fundamental equity research at SBICAP Securities, remarked that the recent talks about a potential deal between Orient Cement and Ambuja have been circulating in the market. According to him, this development is expected to bring positive outcomes for both companies, particularly benefiting Orient Cement shareholders with the higher acquisition price.

The speaker highlighted Ambuja’s previous challenges related to capacity limitations prior to the acquisition by Adani. They emphasized the current advantage of penetrating the southern market and acknowledged the ongoing consolidation within the cement industry.