Adani Cement Expects To Close Sanghi Industries Acquisition In Q3

Adani Cement Ltd. has said it expects the acquisition of Sanghi Industries Ltd. by Ambuja Cements Ltd. to be completed in the third quarter of FY24.

The seller condition precedents are in the process of being completed, the company said in its investor presentation on Wednesday.

The Adani Group company acquired Gujarat-based Sanghi Industries in an all-cash deal in August, valuing the company at an enterprise value of Rs 5,000 crore.

Ambuja Cements will acquire 14.66 crore shares of Sanghi Industries, representing 56.74% of the overall shareholding, from Chairman and Managing Director Ravi Sanghi, members of the Sanghi family, and other promoter entities.

"This acquisition would help to accelerate Ambuja's goal of 140 MTPA ahead of 2028 and reinforce its position as a leader in the construction materials sector," the company said.

The cement major will also make an open offer for an additional 26% stake, or more than 6.71 crore shares held by the minority shareholders of Sanghi Industries, at Rs 114.22 apiece.

The equity value, including the open offer, will be Rs 2,441.3 crore for the overall 82.74% stake if the open offer is subscribed successfully.

Ambuja Cements intends to produce the lowest-cost clinker in the country at the Sanghipuram facility of Sanghi Industries "and then transport this clinker, as well as bulk cement, through coastal routes to the markets of Saurashtra, south Gujarat, Mumbai and Mumbai Metropolitan Region, Karnataka, and Kerala", said Karan Adani, director, Ambuja Cements.

Synergies with the assets of Adani Ports and Special Economic Zone Ltd. will help in the implementation of this strategy, he said.

Ambuja Profit Surges Over Fourfold

Ambuja Cements Ltd.'s second-quarter net profit jumped 4.6 times but still missed analysts' estimates.

The Adani Group-owned cement manufacturer's profit increased to Rs 643.5 crore in the quarter ended September, according to an exchange filing on Wednesday. That compares with the Rs 681.6 crore consensus estimate of analysts tracked by Bloomberg.

The rise in profit was driven by a 2% year-on-year decline in total costs to Rs 3,468 crore, along with a 9.6-fold rise in other income to Rs 378.1 crore.

Ambuja's consolidated profit, which includes earnings of the company's flagship subsidiary, ACC Ltd., surged 19-fold to Rs 987 crore. Consolidated cement sales volume grew 2.3% YoY to 13.1 million tonnes.

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