Ambuja Cement Merges with Sanghi Industries and Acquires Penna Cement

By siliconindia  |  Wednesday, 18 December 2024, 11:57:26 AM IST

Ambuja Cement Merges with Sanghi Industries and Acquires Penna Cement
Ambuja Cement has announced a significant strategic move to merge Sanghi Industries Limited (SIL) and Penna Cement Industries into its operations, aiming to enhance efficiency and competitive strength within the cement industry.
This consolidation will create a unified governance structure, allowing Ambuja to reinforce its position as a market leader while paving the way for sustained growth. For shareholders of Sanghi Industries, this merger presents a transformative opportunity, transitioning their investment from a small-cap, less liquid company to shares in Ambuja Cement, a recognized large-cap leader.
Under the terms of the merger, as reported by Investec Bank plc (UK), 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 Ambuja to issue 13 million new shares, resulting in a slight dilution of the promoter stake by 0.35 percent.
In addition to the merger, Ambuja Cement has acquired a 100 percent stake in Penna Cement for an enterprise value of Rs 104.2 billion, to be paid in cash. This acquisition is expected to significantly enhance Ambuja's coastal market presence and production capacity, further solidifying its leadership in the industry.
The restructuring also includes the consolidation of AdCementation, where Ambuja Cement will issue 174 shares for every 1 share of Adani Cementation, streamlining its organizational framework. This aspect of the transaction will result in the issuance of 8.7 million shares, leading to an additional dilution of the promoter stake by 0.24 percent.
These strategic initiatives are designed to simplify operations, improve compliance, and eliminate complexities related to related party transactions (RPTs). Ambuja's management has reiterated its commitment to achieving growth, cost efficiencies, and synergy targets while adhering to sustainability and ESG (Environmental, Social, and Governance) principles. The mergers are pending regulatory approvals and are expected to be finalized within 9-12 months, with an estimated equity dilution of 0.88 percent for Ambuja Cement shareholders.

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