Ambuja Cement merger with Sanghi Industries, Penna Cement will pave way for industry leadership

This strategic consolidation aims to create a unified governance structure, enhancing efficiency, competitive strength, and compliance processes.

With this merger, Ambuja is set to reinforce its position as a market leader while setting the stage for sustained growth in the cement industry.

For shareholders of Sanghi Industries, the merger presents a game-changing opportunity. They will transition from holding shares in a small-cap, less liquid company to owning shares in Ambuja Cement, a large-cap and market leader.

According to Investec Bank plc (UK), under the terms of the merger, Sanghi Industries shareholders will receive 12 shares of Ambuja Cement (face value Rs 2 each) for every 100 shares of SIL (face value Rs 10 each).

This transaction will lead to Ambuja issuing 13 million new shares, resulting in a minimal dilution of the promoter stake by 0.35 per cent.

In addition, Ambuja Cement has acquired a 100 per cent stake in Penna Cement for an enterprise value of Rs 104.2 billion, to be paid in cash.

This acquisition will significantly boost Ambuja's coastal market presence and production capacity, consolidating its position as an industry leader.

The restructuring also includes the consolidation of Adani Cementation. Ambuja Cement will issue 174 shares for every 1 share of Adani Cementation, further streamlining its organizational structure.

This transaction will result in the issuance of 8.7 million shares, diluting the promoter stake by an additional 0.24 per cent.

These strategic moves promise to streamline operations, simplify compliance requirements, and eliminate complexities related to related party transactions (RPTs).

The management has reaffirmed its focus on achieving growth, cost efficiencies, and synergy targets while maintaining its commitment to sustainability and ESG (Environmental, Social, and Governance) principles.

The mergers are subject to regulatory approvals, including clearances from stakeholders and statutory authorities, and are expected to be completed within 9-12 months.

Upon completion, the equity dilution for Ambuja Cement shareholders is estimated at 0.88 per cent, ensuring minimal impact while unlocking significant value. (ANI)