MUMBAI: The 6.4 billion Swiss francs (nearly Rs 50,200 cr) that Holcim will receive from Adani Group for its stakes in Ambuja Cement and ACC is unlikely to attract any capital gains tax on the seller, an analyst who attended an investor call on Monday cited Holcim CEO Jan Jenisch as having said.
Adani’s offshore vehicle Endeavour Trade and Investment Ltd will reportedly buy the stakes from Holcim’s offshore holding company. In the case of the Vodafone retrospective tax matter, the SC ruled that Indian tax authorities don’t have the jurisdiction to tax an offshore transaction between two non-resident entities wherein controlling interest in a resident company is acquired by the non-resident company.
However, citing the amended law, which did away with retrospectivity, prominent corporate tax lawyer HP Ranina said, “Litigation could not be ruled out as the value for which money is paid is attributable to the value of assets in India.”
Jenisch was also cited as saying that a CCI penalty (if any in future) would not apply to Holcim but on the company. The response was in reference to allegations of cartelisation by CCI against 11 cement makers, including ACC and Ambuja. The matter is in the SC.
Holcim has signed a binding agreement for the Adani Group to acquire its business in India, comprising its 63.11% stake in Ambuja Cement, which owns a 50.05% interest in ACC, as well as its 4.48% direct stake in ACC. The corresponding offer share prices of Rs 385 for Ambuja Cement and Rs 2,300 for ACC translate into cash proceeds of CHF 6.4 billion for Holcim.
Post acquisition, Adani will make an open offer for 26% additional equity from public shareholders of Ambuja and ACC. This would entail additional investment of nearly Rs 31,100 crore, taking the total consideration value to Rs 81,300 crore. According to IDBI Capital, post completion of the transaction in the second half of the calendar year, Adani will become the second-largest cement player in India with an operational capacity of 68 mn tonnes, after UltraTech at 115 mn tonnes per annum. Ambuja Cement closed up 2.48% at Rs 368 apiece while ACC ended higher by 3.7% at Rs 2,192. UltraTech ended down nearly 3% at Rs 6,012.8 while Shree Cemennts closed down 2.2% at Rs 21,980.85 post the acquisition news.
Adani-Hocim acquisition deal
After Post acquisition, Adani will make an open offer for 26% additional equity from public shareholders of Ambuja and ACC