Billionaire Gautam Adani's son Karan will helm the cement firms his group has acquired to become India's second largest cement player and extend his burgeoning empire that spans from ports and energy to airports and telecom.
In a media statement, the Adani group announced the completion of the acquisition of Ambuja Cements and ACC for a total consideration of USD 6.5 billion which includes the buyout of Swiss major Holcim's stake in the two firms and subsequent open offers to minority shareholders.
Soon after Adani's takeover, the two cement firms announced the resignation of their board of directors, including the CEOs and CFOs.
The conglomerate named its founder chairman Gautam Adani as the head of Ambuja Cements. His son Karan, who currently heads the group's ports business, was named as a director of both the cement firms and as chairman of ACC Ltd.
Adani group also quickly named independent directors on the boards of the two firms. These included former State Bank of India (SBI) chairman Rajnish Kumar on the Ambuja Cement board and former Shell India head Nitin Shukla on the ACC board.
It named Ajay Kumar as the new CEO of Ambuja Cement in place of Neeraj Akhoury and Sridhar Balakrishnan for ACC.
Karan, 35, is an economics graduate from Purdue University, US, and has been overseeing Adani Ports and SEZ Ltd, which has grown from two ports to a string of 10 ports and terminals.
Gautam Adani, 60, the world's third richest man, has two sons Karan and Jeet. The younger son Jeet, a graduate from the University of Pennsylvania - School of Engineering and Applied Sciences, is vice president for group finance at the conglomerate.
The new board of Ambuja Cements approved an infusion of Rs 20,000 crore in the company by way of preferential allotment of warrants to equip the firm "to capture the growth in the market."
The acquisition of the two cement firms is the largest ever buyout in the infrastructure and materials sector so far in the country and also the biggest acquisition by Adani.
The Adani family, through their special purpose vehicle Endeavour Trade and Investment Ltd, completed the acquisition after completing the transaction with Swiss firm Holcim and open offer, as per a statement.
"Post the transaction, Adani will hold 63.15 per cent in Ambuja Cements and 56.69 per cent in ACC (of which 50.05 per cent is held through Ambuja Cements)," the statement said.
The combined market capitalisation of Ambuja Cements and ACC Ltd is USD 19 billion as of date, it added.
"The transaction was financed by facilities aggregating to USD 4.50 billion availed from 14 international banks", which includes Barclays Bank and Deutsche Bank AG.
Adani group chairman Gautam Adani described cement as an exciting business, with headroom for growth in India, which exceeds that of every other country well beyond 2050.
Cement is a game of economics dependent on energy costs, logistics and distribution costs, and the ability to leverage a digital platform to transform production as well as gain significant supply chain efficiencies, he said.
"In addition, our position as one of the largest renewable energy companies in the world will help us manufacture premium quality green cement well in line with the principles of a circular economy. All of these dimensions put us on track to become the largest and most efficient manufacturer of cement by no later than 2030," he said.
The board of Ambuja Cements approved an infusion of Rs 20,000 crore by way of preferential allotment of warrants, said the statement.
"This will equip Ambuja to capture the growth in the market. The actions will significantly accelerate value creation for all stakeholders, in line with the Adani group's business philosophy," it noted.
In addition to that, the board committees of both Ambuja Cements and ACC have been reconstituted, in line with the Adani Portfolio's governance philosophy.
"The Audit Committee and the Nomination & Remuneration Committee now comprise 100 per cent independent directors. Further, two new committees have been constituted -- the Corporate Responsibility Committee and the Public Consumer Committee -- both comprising 100% independent directors to provide assurance to the board on ESG commitments and maximise consumer satisfaction," it said.
Currently, Ambuja Cements and ACC have a combined installed production capacity of 67.5 million tonnes per annum (MTPA). Aditya Birla Group firm UltraTech Cement is the leader in the segment with an installed capacity of 119.95 MTPA.
In May this year, the Adani group announced that it has clinched a deal to acquire a controlling stake in Holcim Ltd's businesses in India and a subsequent offer to the public shareholders to acquire 26 per cent stake in both the companies.
Initially, the deal was estimated to be worth around USD 10.5 billion (Rs 81,360 cr), which includes Rs 31,000 crore open offer.
However, the open offer, which closed on September 10, got a mild response from investors. It could buy only 8.28 per cent of the targeted shares in ACC Ltd while in Ambuja Cements only 1.35 per cent of shares were tendered.