Holcim signed a binding agreement with Adani Group to sell its business in India on May 15, 2022
Holcim signed a binding agreement with Adani Group to sell its business in India on May 15, 2022
Swiss building materials major Holcim has said its $6.38 billion Deal with Gautam Adani’s Group is tax free.
Holcim had on Sunday signed a binding agreement with the Adani Group to sell its business in India—about 63% stake in Ambuja Cement, which holds 54.53 stake in ACC (of which 4.48% is direct shareholding).
“So, according to our analysis, this is a tax-free transaction,” Holcim CEO Jan Janish said in an address to investors after the deal on Monday.
Asked about the tax implications, he said: “Never know if any complications arise, but we believe we will get 6.4 billion Swiss francs as net income”.
As per the deal, Adani Group will acquire Holcim’s entire stake in Ambuja Cement and ACC for CHF 6.4 billion ($6.38 billion).
A day later, Adani made an open offer from public shareholders to acquire a 26% stake each in the two listed companies—Ambuja Cements and ACC Ltd.
The Adani family is executing the deal through a Mauritius-based subsidiary, Endeavor Trade & Investment, which is promoted by Acropolis Trade & Investment Limited.
According to the open offer, “the ultimate beneficial ownership of Acropolis Trade and Investment Limited is held by certain members of the Adani family.” Holcim expects the deal to be completed in the second half of this year.
The Swiss building major is also confident of securing regulatory approval from the Competition Commission of India for the entire deal, which is worth around $10.5 billion.
“We have a fairly simple contract. So, basically, the only condition is the approval of the Competition Commission of India, it has nothing to do with any potential litigation as a standard procedure… because Adani doesn’t own the building materials. In their portfolio today, it is expected that this will be approved very quickly,” Mr. Janish said.
He insisted that this is a simple contract, where Holcim is basically selling shares of the company in two businesses.
He said, “So, pretty straightforward. And no more conditions, no more due diligence, or anything involved in the transaction. So, fingers crossed, it’s going to be pretty smooth over the next two to three months.” Needed.”
Further, Holcim also stated that the new owner would be responsible for the penalty imposed by CCI on Ambuja Cements and ACC after the sale.
Asked whether any investigation pending in India would lead to fines on Ambuja or ACC, who would have to pay, Mr Janish said: “It will be with the new owner. We have sold the company … on our behalf. No compensation”.
The fair trade regulator imposed a fine of ₹1,148 crore on ACC and ₹1,164 crore on Ambuja Cements. Both the companies have challenged the fine before the appellate authority, which dismissed their plea in July 2018.
It is currently pending in the Supreme Court.
Adani Group on Monday made an open offer of ₹385 per share for Ambuja Cements Limited and ₹42,300 per share for ACC Limited through Endeavor Trade & Investment.
As for Ambuja Cements, Adani Group has made an open offer for its public shareholders to acquire 51.63 crore equity shares, which is 26% of the expanded share capital, for an aggregate amount of ₹19,879.57 crore.
As for ACC Limited, Adani Group has offered to acquire 4.89 crore shares held by public shareholders, representing 26% of the expanded share capital, aggregating to ₹11,259.97 crore.
Holcim, the world’s largest cement maker, had last month announced its exit from the country after a prolonged struggle here.
Ambuja Cements and ACC currently have a combined installed production capacity of 70 million tonnes per annum. Both the companies have 23 cement plants, 14 grinding stations, 80 ready-mix concrete plants and over 50,000 channel partners across India.