Ambuja Cements To Acquire 46.8% Stake In Orient Cement For Rs 8,100 Cr, To Launch 26% Open Offer

Ambuja Cements Ltd, part of the Adani Group, has announced plans to acquire a 46.8% stake in Orient Cement Ltd. The acquisition, valued at Rs 8,100 crore, will be executed through the purchase of shares from both Orient Cement's promoters and certain public shareholders at a price of Rs 395.4 per share.

The acquisition will take place in two phases, according to Ambuja Cements' regulatory filing. In the first phase, Ambuja will acquire a 37.9% stake from Orient Cement's promoters. In the second phase, it will purchase an additional 8.9% from select public shareholders. Following this, Ambuja Cements plans to launch an open offer for 26% of Orient Cement's expanded share capital at the same per-share price of Rs 395.4.

This acquisition will significantly boost Ambuja Cements' production capacity by adding up to 16.6 million tonnes per annum (MTPA) of cement capacity, including 8.5 MTPA which is already operational under Orient Cement. The deal also positions Ambuja to achieve its target of surpassing 100 MTPA cement capacity by FY25. Additionally, Ambuja has set a longer-term goal of reaching 140 MTPA by 2028.

A key aspect of the acquisition is Orient Cement's potential for expansion in the northern regions of India. The company owns valuable limestone reserves in Rajasthan, which would enable an additional 6 MTPA of capacity in the future. Ambuja's acquisition of Orient Cement also brings strategic benefits by expanding its operational footprint across key markets in South and West India, where Orient currently operates plants in Telangana, Karnataka, and Maharashtra. This expanded footprint is expected to improve logistics efficiency and reduce transportation costs for Ambuja Cements, ultimately boosting its pan-India market share by approximately 2%.

Ambuja Cements has confirmed that the acquisition will be entirely funded through internal accruals, thereby allowing the company to maintain its debt-free status.

Karan Adani, Director of Ambuja Cements, commented on the acquisition, saying, "By acquiring Orient Cement, Ambuja is well-positioned to reach its goal of 100 MTPA cement capacity by FY25, aligning with our accelerated growth plan." He emphasized the long-term benefits that the acquisition would bring to the company's overall market presence.

From Orient Cement's side, CK Birla, the company's promoter, noted that the sale aligns with the group's strategy of reallocating capital to focus on more consumer-centric and technology-driven businesses. Amita Birla, another key promoter, expressed confidence in the acquisition's positive impact on both employees and stakeholders, highlighting the deal's long-term strategic benefits.

Stock market reactions to the announcement were largely positive. As of 9:45 am on the National Stock Exchange (NSE), shares of Ambuja Cements were trading with minor gains of 0.60%, reaching Rs 575 per share. Over the past year, Ambuja Cements' stock has delivered a robust 32% return.

Similarly, shares of Orient Cement were trading with a modest 0.70% gain at Rs 355 per share as of 9:45 am. The stock has delivered impressive returns of nearly 75% over the last year.