Adani Group open offers for Ambuja Cement and ACC get modest investor response

Mumbai: The mandatory offers by Adani Group to buy the stakes of public shareholders of ACC and Ambuja Cement soon after acquiring the majority holdings in the companies have received modest response so far. The open offer by the Gautam Adani-owned conglomerate to buy out 26% each in the two cement makers, which started on August 26, will close on September 9.

Out of the 4.9 crore ACC shares that the Adani Group offered to buy, 25.31 lakh shares were tendered as on September 8 - a day before the open offer ended. This amounts to 5.17% of the shares that it is prepared to buy. For Ambuja Cement, 5.66 lakh shares, or 0.11% of the company's shares, were tendered as on Thursday.

As per the shares tendered on Thursday, Adani Group will have to shell out ₹604 crore for the open offers from the ₹31,140-crore they had set aside.


The group offered to buy 26% of Ambuja Cement for ₹385 per share. Shares of Ambuja Cement ended at ₹461.75 on Thursday, a 20.13% premium to the offer price.

In the case of ACC, the offer price is ₹2,300 per share. ACC shares closed at ₹2,420, a 5.3% premium to the offer price.

Brokers see the likelihood of more participation in the ACC open offer on the last day because of the premium to the offer price.

Sebi rules require acquirers to make a mandatory offer to buy at least 26% stake from public shareholders if they buy 25% or more in a listed company. The rule is aimed at giving minority investors an exit option during the buyout.

In May, Adani Group announced to buy both the companies from Holcim for little over $10.5 billion.

The deal was India’s largest-ever M&A transaction in the infrastructure and materials space.

For Ambuja Cement, Adani had made an open offer to its public shareholders to acquire up to 516.3 million shares, representing 26% of the expanded share capital for 19,879.57 crore.

In the case of ACC, the group had offered to acquire up to 48.9 million shares held by public shareholders, representing 26% of the expanded share capital for 11,259.97 crore.

On completion of the deal, Adani Group stands to become the second-largest cement maker in the country with a combined pan India capacity of 66 million tonnes per annum (mtpa).

Last month, CLSA said shares of ACC and Ambuja Cement were likely to underperform after the conclusion of the ongoing open offer by Adani Group. The brokerage said the focus is likely to shift back to earnings and growth outlook, post open offer.

Analysts are, however, advising investors to hold on to ACC and Ambuja Cement.

“Given that the outlook for the cement sector is good in the mid- to-long term, investors should hold both the stocks,” said Gaurav Dua, head of capital market strategy at Sharekhan.

According to Sanjeev Kumar Singh, analyst at Motilal Oswal Financial Services, cement industry dynamics over the next few years look good due to better demand prospects. “Over the next three years, we expect a demand CAGR (compounded annual growth rate) of 8%, likely to surpass installed capacity CAGR of 5.4%,” he said.