Adani Group approves merger of Sanghi Industries, Penna Cements with Ambuja Cements | Company Business News

Ambuja Cements merger: The Adani Group-owned Ambuja Cements will merge the acquired companies Saurashtra-based Sanghi Industries and Andhra Pradesh-based Penna Cement Industries with itself. The country’s second-largest cement maker announced separate schemes of arrangement for its subsidiaries, Sanghi Industries Limited (SIL) and Penna Cement Industries Limited (PCIL) through a share swap ratio deal.

“This consolidation will help to streamline the organisation structure and simplify compliance requirements for effective governance,” said Ambuja Cement in a regulatory filing to the stock exchanges. The board of Ambuja Cement, in a meeting held on Tuesday, December 17, approved the scheme of arrangement with Sanghi Industries and Penna Cement Industries.

Also Read: Ambuja Cements’ acquisition of Penna Cement for ₹10,422 crore raises Adani’s cement market share by 8%

Ambuja Cements merger: Share swap ratio for SIL, PCIL deal

Billionaire industrialist Gautam Adani-led ports-to-power conglomerate said the amalgamation is subject to requisite approvals and expects the transaction to be completed within 9-12 months. Ambuja Cements holds 58.08 per cent of Sanghi Industries’ paid-up equity share capital. It acquired the company in December 2023.

This will be based on a swap rationale: “For every 100 equity shares of SIL with a face value of ₹10 each, Ambuja Cements will issue 12 equity shares with a face value of ₹2 each” to eligible Sanghi Industries’ shareholders.

Penna Cement will pay equity shareholders, whose names are recorded in the register of members on the record date, ” ₹321.50 for every one fully paid-up equity share of ₹10 each” held in the transferor Company. ” Ambuja Cements, a subsidiary of Adani Cement, completed its acquisition of Penna Cement Industries on August 16, 2024.

Also Read: Adani family invests ₹8,339 cr more in Ambuja Cements; stake rises to 70.3%

Ambuja Cements said in December 2023 that it had completed the acquisition of Sanghi Industries at an enterprise value of ₹5,185 crore. As part of the deal’s completion, Ambuja Cements also executed a trade to acquire 54.51 per cent of the voting share capital from the promoters of Sanghi Industries. 

The cement manufacturer said the share acquisition was fully funded through internal accruals. In June 2024, Ambuja Cements announced it would acquire a 100 per cent stake in Penna Cement Industries for an enterprise value of ₹10,422 crore.

Commenting on the development, Adani Group CEO – Cement Business Ajay Kapur said: “This merger aims to make our company more competitive and efficient, ultimately enhancing shareholder value. Enhanced working capital management and internal funds will support the growth of our business operations.”

“Moreover, unified cash flow management will pool resources for faster expansion and cost savings in administration and governance, simplifying compliance requirements. This advancement through a larger entity will increase market competitiveness and deliver greater value to our shareholders,” he said.

Adani Group entered the cement sector in September 2022 after acquiring controlling stakes in Ambuja Cement from Swiss firm Holcim for $6.4 billion (about ₹51,000 crore) in cash proceeds. Ambuja Cements owns a 51 per cent stake in ACC Ltd. Later, it launched a ₹31,000 crore open offer to acquire 26 per cent additional stakes from public shareholders. 

Also Read: Axis MF, GQG Partners, SBI Life Insurance, others buy stake in Ambuja Cements worth ₹4,250 crore

After that, it expanded its capacity. In October, billionaire Gautam Adani-led Adani Group announced the acquisition of CK Birla group firm Orient Cement at a valuation of ₹8,100 crore as part of its expansion drive. With the acquisition, Adani Cement will achieve a capacity of 100 MT (million tonnes) per annum by the end of FY25 and a two per cent gain in the country’s overall market share.

Adani group aims for a 140 million tonnes per annum capacity by FY28. It competes with Aditya Birla group firm UltraTech Cement Ltd, which leads the segment with a consolidated capacity of 156.66 million tonnes of grey cement per annum (MTPA). Both the cement makers are rapidly scaling up their capacity. Adani Group aspires to have 140 MTPA capacity by FY28, while UltraTech expects to have 200 MTPA by FY27.