Adani Group Announces Merger of Subsidiaries with Ambuja Cement to Strengthen Market Hold

Billionaire Gautam Adani-owned Ambuja Cements has announced the merger of its subsidiaries, Saurashtra-based Sanghi Industries and Andhra Pradesh-based Penna Cement Industries with the parent company on Tuesday. The move aims to simplify the organisational structure and compliance requirements for effective governance. The merger will also solidify the company’s position in the Indian cement industry. 

“...this consolidation will help to streamline the organisation structure and simplify compliance requirements for effective governance,” said the Ambuja Cements in an exchange filing on December 17. “...This advancement through a larger entity will increase market competitiveness,” said CEO, Cement Business Adani Group, Ajay Kapur, according to the filing on NSE. 

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The merger of the two subsidiaries with the parent company will happen through a share swap ratio deal and will be completed in around a year’s time. A swap ratio is a ratio at which an acquiring company offers its shares in return for the target company’s shares during a merger. 

“For every 100 equity shares of SIL with a face value of Rs 10 each, Ambuja Cements will issue 12 equity shares with a face value of Rs 2 each, to eligible shareholders of SIL,” the company added in the statement. 

Adani Group’s Bet in Cement Sector 

Adani Group ventured into the cement business in 2022 after striking one of the biggest deals worth $10.5 billion in the sector by buying Ambuja Cements and ACC from Swiss construction material giant Holcim. Since then, the conglomerate has taken various steps to strengthen its position in the cement sector and has emerged as the second biggest player in the industry after the Aditya Birla Group-owned UltraTech Cement. 

Earlier in August 2023, Ambuja Cements acquired an 83 per cent stake in Sanghi Industries worth $295 million. The deal was the biggest investment made by the Adani Group after the American short-seller Hindenburg Research brought the conglomerate under international scrutiny and accused it of financial misconduct and stock manipulation. This year the group bought Andhra-Pradesh based cement maker Penna Cement Industries. Consequently, the move strengthened its position in southern states. 

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While the Adani Group has become the second largest player in just two years of its cement market debut. UltraTech Cement too has made investments to remain a leader of the sector. In November last year, Aditya Birla Group’s cement maker bought assets of Kesoram Industries worth $645 million to retain its hold in the south and in July this year, the company backed a deal of around $472 million to gain more control of India Cements.