Adani expands Indian cement empire with 56.74 pct Sanghi buy-out deal at $605 mln

Ambuja Cements Ltd., owned by Indian billionaire Gautam Adani, bought a majority stake in Sanghi Industries Ltd. as the tycoon expands his conglomerate’s cement operations.

Ambuja will purchase 56.74 percent of Sanghi from its controlling family, the company said in a stock exchange filing on Thursday.
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The acquisition of Sanghi has a 50 billion rupees ($605 million) enterprise value and will be fully funded through internal accruals, Ambuja said in the statement. It also triggered an open offer for 26 percent more of the company at 114.2 rupees per share.
The deal is expected to aid Adani Group’s plans to vastly expand its cement business after closing the acquisition of Holcim Ltd.’s Indian assets last year, which made the ports-to-power conglom-erate the country’s second-largest producer of the construction material.

Sanghi’s shares advanced 5 percent to 105.4 per share in Mum-bai trading, while Ambuja’s shares gained as much as 1.7 percent.

The buyout is the first major acquisition by Adani Group after months of damage control following US short seller Hindenburg Research’s allegations in January of years-long corporate malfea-sance, which sent the group’s stocks and bonds tumbling. Adani Group has denied any wrong doing.

Ambuja’s capacity will now increase 9 percent to 73.6 million metric tons a year and Adani said in the statement that his conglomerate is now “well on course to hit a target to double that capacity by 2028” ahead of time.
As well as adding Sanghi’s 1 billion metric tons of limestone reserves, Ambuja will also invest in expanding its port in
Sanghipuram, western India, to handle larger vessels. It will also aim to make Sanghi the lowest cost producer of clinker in India.

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