October 18, 2023
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Adani interested in Orient Cement?
Industrialist CK Birla has approached Gautam Adani to sell his promoter stake in listed Orient Cement after rejecting initial offers from other domestic players for failing to meet his valuation demand, people aware of the talks told. Senior management executives on both sides have also met to discuss a potential deal for the Adanis, who already own India’s second largest cement capacity.
Earlier this summer, JP Morgan was roped in by Birla to find a buyer for his business.
The promoter stake in Orient Cement – held by the Birla family and private investment vehicles – is 37.9%, with a current market value of Rs 3,878 crore. The stock has seen a 29% spurt in past three months in anticipation of a sale. The transition will trigger an open offer for an additional 26% stake in accordance with takeover laws, which mandate an incoming promoter or controlling entity to buy the additional shares from existing minority investors.
Deepak Khetrapal, MD, Orient Cement said he is unaware of any such development.
In August ‘23, Adani beat competition from Nuvoco, JK Lakshmi and market leader UltraTech & bought Sanghi Industries for an enterprise value of Rs 5,000 crore – its first cement acquisition after the $6.5-billion buyout of Holcim’s India assets comprising Ambuja Cement and ACC.
Orient Cement is believed to be comparing valuation benchmarks with the Ambuja-ACC sale to Adani Cement largely on account of access to limestone reserves that could help double capacity to 16 million tonnes per annum (MTPA).
Earlier, JSW Cement did put in a non-binding offer, but that didn’t progress far.
Subsequent to Sanghi takeover, Adani Group’s total cement capacity has gone up to 110 MTPA. Ambuja Cement has been aiming at a 140 MTPA capacity by 2028.
With 8.5 MTPA cement capacity that includes a 5.5 MTPA clinker capacity, Orient Cement’s footprint includes manufacturing plants at Devpur (Telangana), Jalgaon (Maharashtra), and Chittpur (Karnataka). The company supplies to 11 states in central, western and south India, with 62% of the company’s sales from the western states and 10% from central. This takeover can satisfy growth hunger of Adani group for its cement business.
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