Ambuja Cements Seeks CCI Nod To Acquire Majority Stake In Orient Cement

Billionaire Gautam Adani-led Ambuja Cements Ltd. has sought approval from the Competition Commission of India to acquire a majority stake in CK Birla group firm Orient Cement Ltd. in a Rs 8,100-crore deal.

According to a CCI notice, the proposed transaction is a two-stage acquisition process, initiated through two share purchase agreements (SPAs) on Oct. 22, 2024, will see Ambuja Cements initially acquiring a 46.8% stake in Orient Cement.

This includes a 37.9% stake from the current promoter group and an additional 8.9% from certain public shareholders.

Pursuant to the acquisition of shares, it "triggers an obligation on the acquirer to make an open offer under SEBI's SAST (Substantial Acquisition of Shares and Takeovers) rules for acquisition of up to 26% of the expanded share capital of the target (open offer)", according to the notice.

Assuming full acceptance of open offer, the stake of Ambuja Cements will stand at 72.8%, said a notice filed with the CCI on Friday.

In October, the Adani Group said it has signed a binding agreement for the acquisition of Orient Cement at an equity value of Rs 8,100 crore. The acquisition will add 16.6 MTPA (million tonne per annum) capacity to Adani Cement, which operates through Ambuja Cements in the sector.

Ambuja Cements, the cement and building material company of Adani Cement and is a part of the diversified Adani Group. It operates 22 integrated cement plants across India, as well as 10 bulk cement terminals and 21 grinding units.

Orient Cement has three manufacturing facilities in Telangana, Karnataka and Maharashtra, with distribution in 10 states across India.

Further, Ambuja Cements said that the proposed acquisition of Orient Cement by Ambuja Cements does not pose any competition concerns, allowing the CCI the flexibility to keep market definitions open.

For its assessment, however, CCI has outlined two relevant markets such as a broad market covering grey cement manufacture and sale in Telangana, Maharashtra, Karnataka, Madhya Pradesh, and Gujarat, and a narrower market focused on Telangana, Maharashtra, and Karnataka.

The parties (Ambuja and Orient Cement) have also identified certain insignificant existing and potential vertical linkages and supply arrangements pertaining to products/ services such as limestone, fly ash, clinker, coal management services, ready mix concrete and provision of construction activities, which is linked to the market for manufacture of cement. These vertical linkages do not give rise to any competition concerns whatsoever, they added.

In June this year, Adani had announced the acquisition of Hyderabad-based Penna Cement at an enterprise value of Rs 10,422 crore, which added 14 MTPA capacity to the country's second largest manufacturer.