By Chris Thomas and Kashish Tandon
BENGALURU (Reuters) -Indian billionaire Gautam Adani’s Ambuja Cements said it would buy a near 83% stake in smaller rival Sanghi Industries for up to $295 million, his group’s first major purchase since turmoil sparked by a U.S. short seller’s report.
Adani Group’s fortunes rose in recent years after it made a series of acquisitions and expanded in sectors ranging from airports to ports to cement.
But Hindenburg Research’s report in January alleging wrongdoing at Adani Group battered its shares and sparked investigations, even though the conglomerate called the report baseless.
Adani Group-controlled Ambuja said on Thursday it would buy a 56.74% stake in Sanghi for 16.74 billion rupees ($202.46 million), and then launch an open offer for a further 26% stake at 114.22 rupees per share. That price is at a 13.8% premium to Sanghi’s closing price on Wednesday.
Reuters reported Adani Group’s closure of the Sanghi deal late on Tuesday.
Adani Group entered the cement sector last year with a $10.5 billion deal to buy India’s Ambuja and ACC from Swiss giant Holcim.
Sanghi has one plant with a capacity of 6.1 million metric tons per annum (MTPA), and will add to more than a dozen plants operated by Adani Group, which has total annual cement production of 67.5 MTPA.
Adani Group’s combined cement capacity is forecast at 101 MTPA by 2025, well behind Indian market leader UltraTech’s capacity of about 138 MTPA.
The Sanghi deal will help Adani Group reach its goal of 140 MTPA of cement manufacturing capacity ahead of its 2028 target, the company said.
Sanghi’s shares, which rallied over the last few days on media reports a deal was brewing, were up nearly 5% at 105.40 rupees. Ambuja’s shares were up 3%.
The deal comes amid booming cement demand as the Indian government has increased infrastructure projects, as well as strong residential home sales. The cement sector grew 9.4% in June.
The Hindenburg report had sparked a confidence crisis and raised concerns about high debt levels at Adani Group. But investors such as Australia-listed investment firm GQG Partners plowed funds into the conglomerate as it repaid debt.
($1 = 82.6850 Indian rupees)
(Reporting by Chris Thomas, Indranil Sarkar and Kashish Tandon in Bengaluru; Editing by Sonia Cheema, Savio D’Souza and Jamie Freed)
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