India's Adani-backed Ambuja boosts cement heft with $295 mln deal for Sanghi Industries

BENGALURU, Aug 3 (Reuters) - Indias Ambuja Cements (ABUJ.NS) said on Thursday it will buy a near 83% stake in smaller rival Sanghi Industries (SNGI.NS) for up to $295 million, closing the Adani Groups gap on market leader UltraTech (ULTC.NS) at a time of booming demand.

The 24.41 billion rupees deal is the billionaire Gautam Adani-led conglomerates first major acquisition since a scathing report by short-seller Hindenburg in January slammed the group shares and led to investigations into the group. A panel set up by Indias top court has found no lapses.

Ambuja said it will first buy a 56.74% stake in Sanghi Industries for 16.74 billion rupees and then launch an open offer for a further 26% stake at 114.22 rupees per share, a 13.8% premium to the stocks closing price on Wednesday.

Sanghi Industries shares, which have rallied over the last few sessions on talks of the deal, were up nearly 5% at 105.40 rupees. Ambujas shares were up 0.3%.

Last year, Adani Group bought Holcim AGs (HOLN.S) cement businesses in India – Ambuja Cements and ACC Ltd (ACC.NS) – for over $10 billion in its largest-ever acquisition.

Its latest acquisition in the space comes amid strong demand as the government has increased its infrastructure projects and strong residential home sales. The cement sector grew 9.4% in June.

The deal, which has an enterprise value of 50 billion rupees, will boost Ambuja Cements capacity to 73.6 million tonnes per annum (MTPA) and help it reach its goal of 140 MTPA by 2028 ahead of time, the company said.

Sanghi has a clinker capacity of 6.6 MTPA, cement capacity of 6.1 MTPA and limestone reserves of 1 billion tonnes.

The Adani Groups combined cement capacity will be 101 MTPA by 2025, still well behind UltraTechs capacity of 136.65 MTPA.

The deal will be paid for by the companys funds generated by the company from its business operations, Ambuja said.

($1 = 82.7200 Indian rupees)