Ambuja Cements Ltd., a subsidiary of the Adani Group, has reached an agreement to purchase Orient Cement Ltd. in a transaction valued at Ksh 124.5 billion ($963 million).
This move is part of billionaire Gautam Adani’s strategy to acquire key producers of essential raw materials for India’s infrastructure development.
According to a filing made by the company on Tuesday, Ambuja will obtain a 46.8% stake in Orient Cement from its existing founders and select public shareholders. The entire transaction will be financed through internal resources.
Additionally, Ambuja plans to make an open offer for a 26% stake in Orient at a price of Ksh 608.33 per share, representing a 12% premium over Monday’s closing price of Ksh 542.26.
On Tuesday, shares of the C K Birla Group’s firm experienced a rise of up to 7.7% in Mumbai before retracting those gains in accordance with the overall trend of the Indian market.
Ambuja’s shares increased by as much as 2% but subsequently lost those gains during the trading session.
This latest acquisition will enhance the conglomerate’s annual cement production capacity by 16.6 million tons and underscores the intensifying competition between Asia’s second-richest individual and the industry leader, UltraTech Cement Ltd., which is headed by billionaire Kumar Mangalam Birla.
“The deal is a setback for UltraTech, and shows that Adani group is putting up tough competition after already having driven prices down,” Jyoti Gupta, analyst at Nirmal Bang Equities Pvt. said.
Although the transaction may appear somewhat costly, Gupta indicated that it represents a significant advantage for Adani in the long term, as it enhances the group’s capabilities in areas anticipated to experience substantial construction activity.
Over the past two years, the Adani Group and UltraTech have successfully completed more than six cement acquisitions, with numerous smaller companies still available for acquisition.
In July, UltraTech secured a controlling interest in a highly sought-after cement manufacturer.
Karan Adani, director of Ambuja Cements and son of Gautam, noted in the filing that Orient’s strategic locations, high-quality limestone reserves, and necessary regulatory approvals provide an opportunity to expand cement production in the near future.
The competitive landscape in India’s cement industry is intensifying as the Adani Group’s acquisition efforts swiftly increase its capacity from 79 million tons, with an ambitious goal of reaching 140 million tons by 2028.
Meanwhile, UltraTech, currently operating at a capacity of 150 million tons, aims to expand to 200 million tons by March 2027.
Both billionaires are striving to dominate the supply of this essential building material, which is vital for supporting India’s infrastructure development initiatives.
