The proposed takeover of Everest Industries (EIL), a subsidiary of ACC, by the Adani group has hit a roadblock. ACC is likely to appoint a merchant banker for selling EIL for greater transparency. Sources say that after Holcim assumed the promoter’s mantle in ACC following completion of its open offer, the Swiss major realised that its earlier agreement with the Adani group had created a controversy and they may invite the ire of investors and regulators by proceeding with it. Instead, they have instead asked ACC to follow a due process like appointing a merchant banker to conclude the sale.
"Since EIL is not part of the core business of ACC, the board, in the coming weeks, is likely to take a decision to divest its stake. The board, in all probability, will appoint a merchant banker to scout for a buyer, and not directly sell it to Adani. Such a move (selling to Adani) will not be seen as fair and transparent and could raise issues relating to corporate governance," sources said.
Holcim’s earlier agreement with the Adani group was struck in January when the Swiss major announced an open offer for ACC. The public announcement then had stated that if and when Holcim acquired control of ACC, it would ask the Mumbai-based company’s board to consider a sale of its 76 per cent stake to the Adani group.
Holcim had said it would propose to ACC’s board to divest its entire stake in EIL to AFPL at a fair value to be agreed between ACC and AFPL. The Swiss major did not want to continue with EIL’s asbestos-based roofing materials business. That agreement had triggered a controversy especially after the Adani group followed it up with an open offer for 20 per cent of EIL at Rs 147 per share.
Questions were asked as to how the Adani group is making an open offer when the ACC board had not even met to consider the sale of its holding in EIL and when a proper valuation had not been done. Sebi did not clear the open offer by Adani, which was supposed to open in March. Some Everest shareholders had approached Sebi to look into the matter. A senior official at Adani group said they are still interested in taking over EIL, and would wait for ACC to initiate the sale process.
Holcim had mentioned in its public announcement for an open offer for ACC, which has since been completed, that "since EIL’s business is not the core business of Holcim, Holcim India and Holcim Mauritius will take necessary steps towards ACC divesting its entire holding in EIL, subject to necessary approvals."
"Holcim was worried that international lenders won’t be supportive. That’s why it may have taken this hasty move to strike a deal with the Adani group, so as convey to everybody concerned that it won’t be associated with any asbestos-related business. But the way it was done was bound to raise questions," said sources.
Following the open offer for ACC, Holcim, through majority-owned Ambuja Cement India, is currently in the driver’s seat with a 35 per cent stake. ACIL submitted a declaration to the ACC board last week that it is now the promoter. Holcim currently ACIL owns 67 per cent in ACIL, with the balance shareholding owned by Gujarat Ambuja Cements.
Holcim, which was targeting a shareholding of 50 per cent in ACC through the open offer, fell short after it failed to get the desired response from shareholders. Its open offer for Ambuja Cement Eastern at Rs 70 per share, which was also part of the broad agreement with Gujarat Ambuja Cements, has recently been cleared by SEBI.
EIL,which was co-promoted by ACC and Belgian major Etex, has manufacturing plants for asbestos and non-asbestos-based building materials in Maharashtra, West Bengal and Tamil Nadu. Three years ago, ACC bought out the overseas co-promoter to increase its shareholding to 76 per cent. EIL reported a turnover of Rs 148 crore during the last fiscal.
Around 85 per cent of the company’s sales turnover comes from roofing products, while its non-asbestos board range which is targeted at the interiors segment, accounts for the balance 15 per cent.