The Adani Group on Sunday announced it has entered into definitive agreements to acquire Swiss cement major Holcim’s entire stake in two of India’s leading cement companies – Ambuja Cements and ACC, for $10.5 billion.

The deal, billed as the largest-ever M&A transaction in the infrastructure and materials space, marks the entry of the Ahmedabad-headquartered Adani Group into the cement business.

Holcim, through its subsidiaries, owns a 63.19% stake in Ambuja Cements and a 54.53% share in ACC (of which 50.05% is held through Ambuja Cements), the Gautam Adani-led ports-to-power conglomerate said in a statement.

The government’s focus on infrastructure development to revive an economy ravaged by the pandemic will stoke demand for inputs such as cement and steel, setting in motion a multiplier effect and creating employment opportunities. 

Adani's entry into the cement business comes just as economic activity in India is beginning to intensify as the pandemic remains under control.    

The value for the Holcim stake and open offer consideration for Ambuja Cements and ACC is about $10.5 billion, which makes this the largest-ever acquisition by Adani.

With this acquisition, the Adani Group will become India’s second-largest cement manufacturer with an annual capacity of nearly 70 million tonnes per annum (MTPA), after the Aditya Birla Group company UltraTech Cement that has a capacity to manufacture about 120 MTPA cement.

"Our move into the cement business is yet another validation of our belief in our nation's growth story. Not only is India expected to remain one of the world's largest demand-driven economies for several decades, India also continues to be the world's second largest cement market and yet has less than half of the global average per capita cement consumption,” said Gautam Adani, Asia’s richest billionaire and chairman of the Adani Group.   

“In statistical comparison, China’s cement consumption is over 7 times that of India’s. When these factors are combined with the several adjacencies of our existing businesses that include the Adani Group's ports and logistics business, energy business, and real estate business, we believe that we will be able to build a uniquely integrated and differentiated business model and set ourselves up for significant capacity expansion,” Adani, 59, added.

“Holcim's global leadership in cement production and sustainability best practices brings to us some of the cutting-edge technologies that will allow us to accelerate the path to greener cement production. In addition, Ambuja Cements and ACC are two of the strongest brands recognised across India. When augmented with our renewable power generation footprint, we gain a big headstart in the decarbonization journey that is a must for cement production. This combination of all our capabilities makes me confident that we will be able to establish the cleanest and most sustainable cement manufacturing processes that will meet or exceed global benchmarks,” he added.

Since entering India in 2005, Holcim has established a track record of sustainable value creation with strategic investments ranging from new best-in-class plants to green technologies such as heat recovery systems.

“I am delighted that the Adani Group is acquiring our business in India to lead its next era of growth,” said Jan Jenisch, CEO of Holcim Limited. “Mr Gautam Adani is a highly recognised business leader in India who shares our deep commitment to sustainability, people and communities. I would like to thank our 10,000 Indian colleagues who have played an essential role in the development of our business over the years with their relentless dedication and expertise. I am confident that the Adani Group is the perfect home for them as well as our customers to continue to thrive.”

With India’s cement consumption at just 242 kg per capita, as compared to the global average of 525 kg, there is significant potential for growth of the cement sector in India. The tailwinds of rapid urbanization, the growing middle class and affordable housing together with the post-pandemic recovery in construction and other infrastructure sectors are expected to continue driving the growth of the cement sector over the next several decades.

Ambuja Cement and ACC are among the most iconic building material brands in India, with a track record of leadership in sustainability and innovation. Their combined footprint includes 31 cement manufacturing sites and 78 ready-mix concrete plants with 10,700 people across India. Both Ambuja Cement and ACC are publicly-listed companies.

The transaction is subject to regulatory and other approvals and is expected to close in the second half of 2022.