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Ambuja Cements Limited Announces Schemes of Arrangement
Team Finance Saathi
17/Dec/2024
What's Covered Under the Article:
- Ambuja Cements' approval of two schemes with Sanghi Industries and Penna Cement.
- The transaction details, including share exchange ratios and merger rationale.
- Information on the impact on shareholding patterns post-arrangement.
Ambuja Cements Limited, one of India's leading cement manufacturers, has recently approved two significant schemes of arrangement involving Sanghi Industries Limited and Penna Cement Industries Limited. The board of directors, in a meeting held on December 17, 2024, gave the green light to both mergers, which are expected to optimize operations and strengthen the group's position in the cement industry.
1. Scheme with Sanghi Industries Limited (Scheme 1):
The first scheme involves the amalgamation of Sanghi Industries Limited, a subsidiary of Ambuja Cements, into Ambuja Cements. Under this arrangement, Ambuja will acquire Sanghi’s cement business, leading to enhanced operational efficiency and a reduction in duplicated efforts. The share exchange ratio has been set at 12 Ambuja Cements shares for every 100 shares of Sanghi Industries, based on a valuation report issued by independent valuers. The merger is expected to benefit from economies of scale and better resource utilization.
2. Scheme with Penna Cement Industries Limited (Scheme 2):
In the second scheme, Ambuja Cements will acquire Penna Cement Industries. Penna Cement, which operates with a cement production capacity of 14 MTPA, is part of the Adani Group, like Ambuja. The transaction will involve cash consideration, with Penna shareholders receiving Rs. 321.50 per share. This merger is also expected to streamline operations and lead to better resource management, reduced overheads, and a more competitive market presence for Ambuja.
Transaction and Regulatory Approvals:
Both schemes are subject to regulatory approval, including from the National Company Law Tribunal (NCLT). As part of the process, the companies will also ensure that all transactions are conducted at arm’s length, in line with SEBI regulations on related party transactions. The valuation for the transactions has been reviewed by M/s GT Valuation Advisors and M/s IDBI Capital Market & Securities Limited, who have provided fairness opinions.
Impact on Shareholding Pattern:
Post-merger, the shareholding structure of Ambuja Cements will see minor adjustments. For Scheme 1, certain shareholders of Sanghi Industries will be reclassified under Ambuja’s public category, without affecting the control over the company. In Scheme 2, the shareholder base will remain largely the same, with minor changes to public shareholding.
Both schemes reflect Ambuja Cements' strategy to consolidate its position in the cement sector, optimize operations, and enhance shareholder value by integrating two strategically important companies under the Adani Group umbrella.
The schemes also emphasize synergies within the Adani Group, aiming for cost-efficiency, enhanced market share, and improved profitability for the merged entities.