Tycoon Adani to Merge Cement Units Sanghi, Penna With Ambuja

(Bloomberg) — Adani Group will consolidate its cement operations by merging two units under Ambuja Cements Ltd. as billionaire Gautam Adani streamlines a business that is vital for India’s infrastructure push.

The board of Ambuja Cements Tuesday approved the merger of units Sanghi Industries Ltd. and Penna Cement Industries Ltd. with itself to consolidate the production of the building material under one roof, the Adani Group-controlled cement maker said in an exchange filing.

The conglomerate had acquired Sanghi Industries and Penna Cement in the last two years to expand its cement business after closing the acquisition of Holcim Ltd.’s Indian assets in 2022, which made the ports-to-power group the country’s second-largest producer of the construction material.  

Combining the acquisitions into its flagship asset helps the Adani Group to build scale and get potential cost benefits amid an intense market share battle with UltraTech Cement Ltd., the sector leader led by fellow billionaire Kumar Mangalam Birla.

Ambuja will give 12 shares for every 100 of Sanghi Industries to shareholders, the filing said. It will pay 321.50 rupees each to acquire Penna Cement shares it doesn’t hold now. 

Shares for Ambuja rose as much as 1.4% during trading in Mumbai before erasing those gains. Sanghi’s shares fell as much as 13%, touching the lowest level since June last year, signaling the swap ratio was deemed unfavorable by some investors.

The merger is expected to be completed within a year after approvals from stakeholders and regulators.

SOURCE BNN BLOOMBERG