Ambuja Cements Acquires Orient Cement for ₹8,100 Crore

22 Oct 2024 , 03:19 PM

Ambuja Cements Ltd., part of the Adani Group, shared news on Tuesday, October 22. It will take a controlling stake in Orient Cement Ltd. The deal is valued at ₹8,100 crore. This acquisition will boost Ambuja’s production capacity by 16.6 million tonnes per annum (MTPA). Of this, 8.5 MTPA is current capacity, while 8.1 MTPA is set for future growth.

In addition, Ambuja Cements will gain access to an extra 6 MTPA of capacity in Northern India by utilizing Orient Cement’s premium limestone reserves in Rajasthan. This is expected to be achieved through Orient Cement’s limestone mining lease in Chittorgarh.

Initially, Ambuja will purchase a 46.8% stake in Orient Cement from its promoters and existing shareholders, financing the acquisition entirely from its internal resources while maintaining a debt-free status.

The acquisition price is set at ₹395.4 per share, representing a 12% premium over Monday’s closing price for Orient Cement shares. Over the past six trading sessions, including Tuesday, Orient Cement’s stock price has surged by 24%. This deal also triggers an Open Offer in which Ambuja will buy up to 5.34 crore shares, or 26% of Orient Cement’s outstanding equity, from public shareholders at the same price of ₹395.4 per share.

As of the September quarter, Orient Cement’s promoters held a 37.9% stake in the company. Among public investors, India’s domestic mutual funds—such as Bandhan MF, Nippon Life MF, Quant MF, and Aditya Birla Sun Life MF—had a collective 13.38% stake.

The acquisition is expected to enhance the Adani Group’s share of the Indian cement market by 2%.

Notable public shareholders in Orient Cement include:

Shri Jagannath Educational Institute: 1.55%

Sri Govinddeo Educational Institute: 1.47%

Shri Venkateshwara Educational Institute: 1.39%

Rukmani Birla Educational Society: 1.69%

Birla Institute of Technology and Science: 1.72%

Additionally, Orient Cement has secured an agreement with Madhya Pradesh Power Generating Company to establish a 2 MTPA cement grinding unit within the Satpura Thermal Power Station at Sarni.

In a press release, Ambuja Cements commented, “The acquisition of Orient Cement strengthens Ambuja’s existing cement network, optimizing lead distances and logistics costs while boosting market share in core regions.”