Adani Group Buys Penna Cement For $1.2 Billion Enterprise Value

(Bloomberg) -- Ambuja Cements Ltd., owned by Adani Group, has signed a binding agreement to acquire Penna Cement Industries at an enterprise value of 104.2 billion rupees ($1.2 billion) as billionaire Gautam Adani’s conglomerate returns to capital spending after rebounding from the US-based short-seller’s attack in early 2023.

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Ambuja will buy Penna — a smaller rival with operations in peninsular India and Sri Lanka — through internal accruals and expects to complete the acquisition within four months, according to filings on Thursday.

While the acquisition will help expand Ambuja’s market presence in south India, Penna’s limestone reserves will help increase cement capacity, according to a statement that cited Ambuja CEO Ajay Kapur.

Penna has an production capacity of 10 million tons a year, which will add to Adani’s 78.9 million tons through Ambuja and its units. The group plans to reach annual capacity of 140 million tons by 2028.

Adani Group is doubling down on its investments in cement, a crucial resource for achieving Prime Minister Narendra Modi’s goal to modernize the country’s creaking infrastructure and meeting the growing demand for homes in the world’s most populous country.

During the financial year 2022-23, Penna’s revenues dropped to 19.53 billion rupees down from 31.5 billion rupees in the previous year, and its credit rating has been on the down-slide since 2020.

Ambuja aims to make Penna competitive on cost and productivity, and improve its operating performance, Kapur said in the statement.

Adani bought a controlling stake in Ambuja and ACC for $10.5 billion in 2022 in a deal financed by loans from global banks.

Adani Group is in the middle of recovering from a scathing attack from short-seller Hindenburg Research, which accused the group of fraud and “brazen” stock price manipulation, that wiped out over $100 billion in value at one point. The group has repeatedly denied the charges.

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