Ambuja Cements, Orient Cement shares surge up to 10%; ACC tanks on board approval for merger — Check details

Shares of Ambuja Cement and Orient Cement rallied up to 10% on Tuesday, December 23, after the former announced that it will merge its subsidiaries ACC and Orient Cement with the company.

ACC shares, meanwhile, cracked following the announcement. All three cement companies are part of billionaire Gautam Adani-led Adani Group.

Orient Cement share price zoomed 9.8% to ₹180 on the BSE. Meanwhile, Ambuja Cements' share price rallied 4.3% to the day's high of ₹563.25. At the same time, ACC shares witnessed some selling pressure, losing 1.67%.

Ambuja Cements, ACC, Orient Cement merger details

The Adani group on Monday announced the simplification of its group structure as it decided to consolidate the cement business under one entity.

According to the exchange filing shared by Ambuja Cements on Monday, the company said it has received approval for two separate Schemes of Amalgamation from its board to merge ACC and Orient Cement, establishing a single consolidated ‘One Cement Platform’.

The company said the proposed merger will deliver operational synergistic benefits by optimising manufacturing and logistics networks, streamlining corporate structure, strengthening the balance sheet, and facilitating efficient capital allocation to support growth and bolster market leadership.

According to the statement by Ambuja Cement, the merger will optimise costs and improve margin by at least ₹100 PMT.

Post-merger of the subsidiaries — ACC Ltd, Orient Cement, Penna Cement and Sanghi Industries — will become an integral part of Ambuja, with a capacity of 107 million tonnes per annum.

What is the share swap ratio of Ambuja, ACC, Orient merger?

As per the merger scheme, for every 100 equity shares of ACC with a face value of ₹10 each, Ambuja will issue 328 equity shares with a face value of ₹2 each to eligible shareholders of ACC.

Also, for every 100 equity shares of Orient Cement with a face value of Re 1 each, Ambuja Cements will issue 33 equity shares with a face value of ₹2 each, to eligible shareholders of Orient Cement.

Subject to requisite approvals, the transaction is expected to be completed over the next one year, Ambuja said in a press release.

Domestic brokerage Motilal Oswal Financial Services (MOSL), said the announcement is a positive development. It maintained its constructive view on the company, given its rising scale of operation, balanced capacity mix, and profitability improvement.

“We value ACEM at 20x Sep’27E EV/EBITDA to arrive at our target price of ₹750. We don’t give any Holdco discount in our TP for ACC and Orient Cement,” it said.

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