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Indian business mogul Gautam Adani has completed a significant acquisition, marking the first since his infrastructure empire faced turmoil earlier this year due to a short seller report. Adani’s Ambuja Cements, acquired from Holcim for $10.5bn in 2020, has purchased a 57% stake in Gujarat-based Sanghi Industries in a deal worth $600mn. The transaction takes into account the company’s debt and liquid assets, valuing Sanghi at Rs50bn ($600mn).
An open offer has been made to acquire an additional 26% stake at 114.22 rupees per share, representing a 14% premium to Sanghi’s closing price on Wednesday. Adani confirmed that the acquisition is funded using its own cash, signaling a departure from its previous debt-fueled strategy.
After facing allegations of financial misconduct from Hindenburg Research in January, resulting in a $150bn decrease in stock market value, Adani is now making a comeback in the acquisition arena. Adani has consistently maintained his innocence and the group’s shares have since progressively recovered.
“We view the acquisition by Ambuja Cements as a mutually beneficial opportunity for both shareholders,” stated Sanghi Industries’ Chairman and Managing Director, Ravi Sanghi. Sanghi Industries boasts the largest cement and clinker plant in India, producing 6.1mn tonnes of cement annually at its cement facility in western India.
This acquisition strengthens Adani’s position in the competitive Indian cement market, which is anticipated to benefit from Prime Minister Narendra Modi’s infrastructure initiatives.
Following the acquisition of Ambuja and its subsidiary ACC, Adani has rapidly become India’s second-largest cement producer. However, UltraTech Cement, part of the Aditya Birla conglomerate based in Mumbai, continues to lead with a manufacturing capacity of 132.5mn tonnes of grey cement per year.
Adani has set an objective to increase Sanghi’s production to 15mn tonnes annually. With its current assets producing 67.5mn tonnes per year, the group aims to reach 140mn tonnes by 2028. Karan Adani, Gautam Adani’s son and CEO of Adani Ports and Special Economic Zone, expressed confidence in achieving this goal ahead of schedule.
Gautam Adani, Chairman of the Adani Group, described the Sanghi acquisition as a significant advancement in Ambuja Cements’ journey of accelerated growth.
In its most recent quarterly report, Ambuja revealed a 39% decline in standalone profits compared to the same period last year, with expenses such as finance costs increasing, despite a nearly 20% increase in sales.
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