Adani Group one of India’s largest and most successful conglomerate is in advanced negotiations for the transfer of ownership of many Holcim Ltd.’s Indian subsidiaries according to individuals close to the conglomerate.
The conglomerate is close to acquiring one of India’s largest cement companies, Ambuja Cement from Holcim Ltd. The deal could be finalised and announced very soon. Currently, Holcim Ltd owns 63.1% of Ambuja Cement and they been toying with the idea of selling their stake for a while now.
The shares of Ambuja Cement have recently seen an upturn in fortunes as the value has increased by just under 4% over the past 3 months as they cross the milestone valuation of $10 billion USD. In the same period the shares of Adani Group rose in valuation by 5.7%. So, perhaps, the acquisition could do wonders for all parties involved.
The companies plan to put pen to paper soon, but nothing specific has been decided on nor have they been finalised so the entire deal could still fall through.
Holcim Ltd has recently been trimming their company little by little by selling off their non-core assets. They have recently been on a journey of divestment as they sold all of their Brazilian subsidiaries for around $ 1 billion USD and they even plan to leave the economy of Zimbabwe as they plan to divest from those subsidiaries as well.
Currently, as Indians and Indian businesses are reeling from the lack of business over the past two years due to the coronavirus and ensuing lockdowns enforced by the government, the construction industry was hit hard. Consequently, the cement industry was deflated as well. The industry currently, has many players and Ambuja Cement faces tough competition from other players in the market who are also backed by massive conglomerates and parent companies.
Not only that, but the price of raw materials keeps fluctuating, so companies find it hard to keep the prices at a competitive level too. With increasing fuel costs as well, companies are finding it hard to transport raw materials and send out their finished products as well. Therefore, the cement market currently is a bit shaky and volatile and gaining profits is quite difficult and not guaranteed.
Ambuja Cements is currently 39 years old and they have six manufacturing plants along with eight cement grinding plants across the nation. Only time will tell if the deal proves to be fruitful and if it is even going to happen in the first place.
