Holcim’s agreement with Adani over ACC’s 76.01 per cent stake in materials firm Everest Industries is raising regulatory eyebrows and investor concerns, with analysts dubbing it as a curious and strange deal. Holcim, which agreed that it wished to take full control of ACC last month, may have to make an open offer for Everest Industries once its ACC deal is complete and it has secured control, analysts and industry sources said.
Meanwhile, the Adani group has already made an announcement to buy 20 per cent of EIL’s shares from the public at Rs 147 per share, following an agreement with Holcim. Strangely, Holcim is yet to get control of the company and ACC’s board has not met and considered any proposal to sell its stake in EIL to the Adani group. The offer price of EIL has been calculated as per the formula fixed by Sebi.
The question is, what happens if the fair valuation, after Holcim acquires control over ACC, arrives at a price much higher than Rs 147. It is not clear if the Adani group will revise its current price. The other issue is that Holcim will have to make an open offer for Everest under the Sebi takeover guidelines, after it assumes control of EIL’s parent, ACC.
Some believe that ACIL’s offer for EIL should not be incumbent on the outcome of the ACC open offer. In fact, some Everest shareholders, who feel that Holcim is already in the driver’s seat at ACC, have already approached Sebi to look into the matter. The fact that Holcim has struck a deal with the Adani group for divesting ACC’s shareholding in Everest Industries is being seen as an exercise of control.
"Since EIL’s business is not the core business of Holcim, Holcim India and Holcim Mauritius will take the required steps towards ACC divesting its entire holding in EIL, subject to necessary approvals," Holcim said in the public announcement.
Holcim, through Ambuja Cement India (ACIL) - a 67:33 JV between by Holcim and Gujarat Ambuja Cements - will make an open offer for 38 per cent in ACC next month at Rs 370 per share, while its offer for Ambuja Cement Eastern has been priced at Rs 70 per share. Following the deal with Gujarat Ambuja Cements, which was finalised last month, Holcim has already identified the Adani group as the purchaser of ACC’s majority holding in EIL.
It seems as if this acquisition will have to wait, especially if the open offer for ACC is successful, as it would result in a transfer of management control. Holcim has agreed to propose to the board of directors of ACC to divest its entire stake in EIL to AFPL at a fair value to be agreed between ACC and AFPL.
Following the deal with Holcim, the Adani group - through group firms Accurate Finstock (AFPL) and Adani Port Infrastructure - has announced it will make an open offer for 20 per cent in EIL for Rs 147 per share.
Many see a parallel between the Holcim-ACC-Everest matter and the BP Amoco-Castrol-Foseco issue, which led to a major controversy a few years back. While the UK-based BP Amoco wanted to make an offer for only Castrol India, Sebi insisted that it would have to make an offer for Foseco as well since there was a change in control of both the companies.