At an equity value of Rs 8,100 crore, Ambuja Cements Ltd, a member of the Adani Group, has announced that it will purchase a 46.8% share in Orient Cement Ltd. The purchase of shares at a price of Rs 395.4 per share from the promoters of Orient Cement and certain public shareholders will be the means by which the agreement is carried out.

According to a stock exchange statement by the Adani group firm, the transaction will be completed in two phases: Ambuja Cements would purchase 37.9% from the promoters of Orient Cement and an additional 8.9% from specific public shareholders. Ambuja intends to next initiate an open offer for 26% of the increased share capital of Orient Cement at the same price per share.

With 8.5 MTPA already in operation and an additional 8.1 MTPA in development, this acquisition will increase Ambuja’s cement capacity to 16.6 MTPA. 

The share price of Ambuja Cements was up 0.6% from the previous close, trading in the green at Rs 575.15 on the NSE. However, following yesterday’s 6% rise, the share price of Orient Cement dropped by about 1% to Rs 347.

The agreement moves Ambuja one step closer to its long-term objective of reaching 140 MTPA of cement capacity by 2028, with a target of over 100 MTPA by FY25. Additionally, it claimed that Orient Cement’s limestone reserves in Rajasthan allow Ambuja to potentially expand its capacity in North India by 6 MTPA. 

The acquisition is a component of Ambuja Cements’ fast growth strategy, according to director Karan Adani, who noted, “By acquiring Orient Cement, Ambuja is well-positioned to reach 100 MTPA cement capacity in FY25.”

Amita Birla voiced confidence in the deal’s long-term advantages for stakeholders and employees, while CK Birla, the promoter of Orient Cement, stated that the group’s objective is to reallocate money to focus on consumer-centric and technology-driven enterprises.

Ambuja will keep its debt-free position by paying for the acquisition exclusively with internal accruals. Ambuja’s current footprint will be enhanced by Orient Cement’s strategic assets, which include its operational plants in Telangana, Karnataka, and Maharashtra. This would lower logistics costs and increase overall market share by 2% throughout India.

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