By Hritam Mukherjee
(Reuters) -Ambuja Cements, India’s No.2 cement maker, said on Tuesday that it would buy a nearly 47% stake in rival Orient Cement for 37.91 billion rupees ($451 million), but analysts said there were doubts about the deal receiving regulatory approval.
Ambuja — which along with ACC are the two cement companies controlled by the Adani conglomerate — said it would pay 395.40 rupees per Orient share, which is a premium of more than 12% to the stock’s closing price on Monday.
The deal will help increase Adani’s market share by 2%, said Karan Adani, director of Ambuja Cements, and values Orient, which is based in the south Indian state of Telangana, at 81 billion rupees.
However, while Orient’s stock initially jumped 7.5% to a record high of 379 rupees, it soon reversed course to trade 0.7% lower at 350.6 rupees, which analysts said was a sign of worries about potential regulatory concerns.
“Considering the backdrop of a slew of deals in recent past, especially in the southern region of India, investors are concerned if the deal will receive approval from the country’s competition regulator,” Ashutosh Murarka, a research analyst at Choice Broking, said.
India’s cement sector has seen a host of deals since the Adani group’s entry in 2022, as billionaire Gautam Adani’s ports-to-power conglomerate aims to challenge UltraTech Cement’s pole position in the sector.
The deals include Ambuja’s deal with Penna and UltraTech’s deals with Kesoram and India Cements, both focussed on south India.
($1 = 84.0675 Indian rupees)
(Reporting by Hritam Mukherjee in Bengaluru; Editing by Abinaya Vijayaraghavan and Savio D’Souza)
