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

Ambuja Cements Ltd., the Adani Group-owned cement manufacturer, announced the acquisition of Orient Cement Ltd. at an equity value of Rs. 8,100 crore as part of its expansion spree.

This acquisition will add 16.6 million tonnes to Ambuja Cements' annual capacity, the cement maker said in an exchange filing on Tuesday. It will be fully funded through internal accruals.

Billionaire Adani's cement arm will acquire a 46.8% stake from the promoters and other related entities, which will trigger an open offer to acquire an additional 26% stake at Rs 395.40 per share.

The acquisition of CK Birla Group's cement arm complements Ambuja to cement its existing footprint, the firm said in the statement. This reduces the overall lead distances and logistics costs for the cement business and improves market share in core markets, it said.

The operational plus ready-to-implement capacity will be acquired at $58 per tonne. The capacity acquired is lower than the greenfield set-up cost of $110-120 per tonne and the operational capacity valuation is $113 per tonne.

The acquisition is expected to be completed in three to four months and is subject to the approval of the competition watchdog.

Through this acquisition, Ambuja Cements is poised to reach 100 MTPA cement capacity in the current financial year, according to Karan Adani, Director of Ambuja Cements. "This will help to expand Adani Cements' presence in core markets and improve its pan-India market share by 2%."

With a presence across Telangana, Karnataka And Maharashtra, Orient Cement's current capacity stands at 8.5 million tonnes per annum with a ready-to-implement cement capacity at 8.1 MTPA.

This will accelerate Ambuja Cements' journey to over 100 MTPA capacity by 2025 and 140 MPTA by 2028.

Reports of Orient Cement-Ambuja deal were making rounds in the market earlier and this is going to be positive for both players, said Sunny Agarwal, head of fundamental equity research at SBICAP Securities. He said the higher acquisition price benefits Orient Cement shareholders.

"For Ambuja, it was struggling with capacity constraints before the Adani takeover. It is now a positive to get access to southern market. Consolidation is underway in the cement sector," he said.