Bloomberg has reported on Holcim proposing to dispose of Ambuja Cements Ltd. Holcim owns ACC Ltd and Ambuja Cements in India. With approximately 64Mta of cement capacity it is second-largest producer behind UltraTech Cement in the country.
The Swiss conglomerate is believed to have held early-stage negotiations with JSW and Adani Group, among others, to explore their interest levels, according the Economic Times. Deliberations are in the early stages and may not lead to a transaction, according to Bloomberg.
Referring to the fact that Holcim operates through two subsidiaries in India, Market analysts ESN has commented that “technically, the disposal of this entity would not be simple.” Since the legal and organisational revamp in 2018, Holcim has owned directly (via the Mauritian shell company Holderind Investments) 63 per cent of Ambuja Cements Ltd with a market value of US$9.6bn, which itself owns 50 per cent of ACC Ltd.
Holcim has retained only a direct stake of nearly four per cent in ACC Ltd. The purchaser will thus have to buy out the minorities (37 per cent of Ambuja Cements and, unless there is an exemption, 46 per cent of ACC). A potential purchaser would thus have to spend US$9bn to take control of 100 per cent of Ambuja Cements and ~US$2.5bn to buy out the minority interests of ACC, claims ESN.
ESN comments further that: “In other words, a multiple of US$182/t of capacity, which seems a little high given the transactional ratios seen in India (US$110-120/t).”
Founded in 1983, Ambuja has a cement capacity of 31Mta, and has six integrated manufacturing plants and eight cement grinding units in India. ACC Ltd was incorporated in 1936 and has a cement capacity of 33.05Mta consisting of 17 cement plants.
