Adani Group’s Ambuja Cements on Tuesday announced the signing of 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% shares of OCL from its current promoters and certain public shareholders. The acquisition will be fully funded through internal accruals.
Ambuja will acquire the 46.8% shares at Rs 395.4 apiece, which is a 12% premium to Monday's closing price for Orient Cement shares. This acquisition also triggers an Open Offer, under which Ambuja will acquire an additional 26% stake at the same share price of Rs 395.4 apiece.
OCL has 5.6 million tonnes per annum (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.
“This timed acquisition marks another significant step forward in Ambuja Cements’ accelerated growth journey, increasing capacity by 30 MTPA within two years of Ambuja’s acquisition,” said Karan Adani, Director of Ambuja Cements.
“By acquiring OCL, Ambuja is poised to reach 100 MTPA cement capacity in FY 25. The acquisition will help to expand Adani Cement’s presence in core markets and improve its pan-India market share by 2%. 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,” added Adani.
In June this year, the country’s second-largest cement manufacturer acquired Hyderabad-based Penna Cement at an enterprise value of Rs 10,422 crore, which added 14 MTPA capacity to its capacity.
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. 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”.