No taxes on $6.38 billion transaction with Adani Group, says Holcim


Swiss building materials group Holcim has said its $6.38 billion deal with the group of Gautam Adani, Asia’s richest man, is tax free.

Holcim had on Sunday signed a binding agreement with Adani Group to sell its business in India – about 63% stake in Ambuja Cement – which holds a 54.53 stake in ACC (of which 4.48% direct Participation).

“According to our analysis, this is a tax-free transaction,” Holcim CEO Jan Jenisch said when addressing investors after the deal on Monday.

When asked about the tax implications, he said: “You never know if there will be any complications, but we assume that we will get the 6.4 billion francs as net proceeds.”

Pursuant to the transaction, Adani Group will acquire Holcim’s 100% interest in Ambuja Cement and ACC for CHF (Swiss Francs) 6.4 billion (US$6.38 billion).

A day later, Adani also made an open offer, 26% stake each in the two listed companies – Ambuja Cements and ACC Ltd. – to be acquired from public shareholders.

The Adani family conducts the business through its Mauritius-based subsidiary, Endeavor Trade and Investment, managed by Acropolis Trade and Investment Ltd. is promoted.

“The ultimate beneficial ownership of Acropolis Trade and Investment Ltd. is held by certain members of the Adani family,” the open offer reads. Holcim expects the transaction to close in the second half of the year.

The Swiss builder is also confident of receiving regulatory approval from the Indian Competition Commission for the entire deal, which is valued at around $10.5 billion.

“We have a fairly simple contract. So basically the only condition precedent is the approval of the Indian Competition Commission, this has nothing to do with a possible litigation as a standard process…as Adani has no building materials in its portfolio today, it is expected that this will be a very quick approval” , said Herr Jenisch.

This is a simple deal in which Holcim is essentially selling the company’s stake in the two companies, he claimed.

“So very direct. And no further terms, no further due diligence or anything else related to the transaction. So fingers crossed this should go pretty smoothly over the next two to three months,” he added.

Also, Holcim said that after the sales, the new owner would be liable for the fines imposed by the CCI on Ambuja Cements and ACC.

Asked if investigations pending in India would result in a fine being payable against either Ambuja or ACC, Mr Jenisch said: “It will be up to the new owner. We sold the company…there would be no compensation from our side.”

The Fair Trade Regulator had fined ACC ₹1,148 crore and ₹1,164 crore against Ambuja Cements. Both companies have appealed the fine before the Appellate Body, which dismissed their lawsuit in July 2018.

This is currently pending before the Supreme Court.

Adani Group announced an open offer at ₹385 per share for Ambuja Cements Ltd through Endeavor Trade and Investment on Monday. and ₹2,300 per share for ACC Ltd.

For Ambuja Cements, Adani Group has made an open offer to its public shareholders to acquire up to 51.63 billion shares, representing 26% of the enlarged share capital, for a total consideration of £19,879.57 billion.

For ACC Ltd. Adani Group has offered to acquire up to 4.89 billion shares held by public shareholders, representing 26% of the enlarged share capital, for a total consideration of ₹11,259.97 billion.

The world’s largest cement producer Holcim last month announced its withdrawal from the country after a long struggle here.

Ambuja Cements and ACC currently have a combined installed production capacity of 70 million tons per year. The two companies together have 23 cement plants, 14 grinding plants, 80 ready-mixed concrete plants and over 50,000 distributors across India.

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