Ambuja Cements to 46.8% stake in Orient Cement; announces open offer at Rs 395.40/share

Ambuja will acquire 46.8% shares of OCL from its current promoters and certain public shareholders. The acquisition will be fully funded through internal accruals.

Consequent to the proposed acquisition, Ambuja Cements has announced an open offer for up to 5.34 crore equity shares, constituting 26% of the expanded share capital, at a price of Rs 395.40 per equity share from the public shareholders of OCL. The open offer price represents 12.27% premium to OCL's previous closing price of Rs 352.2.

Shares of Orient Cement were currently trading 0.20% lower, at Rs 351.50, while those of Ambuja Cements hovered at Rs 567.40 (down 0.79%) on the BSE.

Orient Cement has 5.6 MTPA clinker capacity and 8.5 MTPA cement capacity along with statutory clearance to increase the clinker capacity by another 6.0 MTPA and cement capacity by another 8.1 MTPA. It had recorded turnover of Rs 3,185.09 crore in FY24.

OCL has a limestone mining lease in Chittorgarh for setting up an integrated unit (IU) with clinker of 4 MTPA and a split grinding unit (GU) of 6 MTPA in North India. OCL has also secured a concession from MPPGCL, Madhya Pradesh for setting up a grinding unit within the premises of Satpura Thermal Power Plant.

Both these complement the Adani Group's existing cement footprint,' Ambuja Cements stated.

The Adani Group company further said that it plans to optimize OCL's overall capacity utilization to enhance its cost and competitiveness and improve its operating performance while leveraging the synergies inherent in the existing cement business.

Karan Adani, director of Ambuja Cements, said: 'This timed acquisition marks another significant step forward in Ambuja Cements' accelerated growth journey, increasing cement capacity by ~30 MTPA within two years of Ambuja's acquisition.

By acquiring OCL, Ambuja is poised to reach 100 MTPA cement capacity in FY25. The acquisition will help to expand Adani Cement's presence in core markets and improve its pan-India market share by 2%.

OCL's assets are highly efficient, equipped with railway sidings and well supported by captive power plants, renewable energy, WHRS and AFR facilities. OCL's strategic locations, high-quality limestone reserves and requisite statutory approvals present an opportunity to increase cement capacity in the near term to 16.6 MTPA.

Ambuja Cements is a major cement producing company in India. The principal activity of the company is to manufacture and market cement and clinker for both domestic and export markets.

The cement major's consolidated net profit fell 28.63% to Rs 646.31 crore in Q1 FY25 as against Rs 905.61 crore recorded in Q1 FY24. Revenue from operations declined 4.61% YoY to Rs 8,311.48 crore in the quarter ended 30 June 2024.