Ambuja cements deal to acquire Hyderabad-based Penna
Adani Group unit Ambuja Cement is to acquire Hyderabad-based Penna Cement at an enterprise value of ₹10,422 crore, adding to its capacity and market share in southern India. Mumbai-headquartered Ambuja Cement will acquire 100% of Penna Cement from existing promoter group P Pratap Reddy and family, the company said in a stock exchange filing.
Penna Cement has around ₹3,000 crore of debt, including fund, non-fund debt and inter-corporate deposits, according to sources.
Of the enterprise value, Ambuja Cement will hold back around ₹3,500 crore as milestone payments for completion of 2 million tonne (MT) cement capacity and 3 MT clinker facility at Penna's Rajasthan plant, which is likely in a year.
Acquisition to be Funded Through Internal Accruals
ET was the first to report in its June 13 edition that the Adani Group is in talks to acquire Penna Cement. The group is also evaluating other cement companies for acquisition, including Gujarat-headquartered Saurashtra Cement and the cement business of Jaiprakash Associates, as well as ABG Shipyard-owned Vadraj Cement, ET had reported, adding that it has a war chest of $3 billion for these purchases.
The acquisition will be funded through internal accruals. For a capacity of 14 million tonnes per annum (MTPA), the valuation works out to $89.15 per tonne. Sources added that the company would be able to add another 3 MT capacity in Rajasthan because of the surplus clinker facility which would further reduce the cost. The Adani Group's acquisition of Sanghi Cement with a
