Holcim-Ambuja-ACC: Unlocking synergies. Really?

Proxy advisory firm IIAS has, in this 2 part report, put the spotlight on the Holcim-Ambuja-ACC restructuring. Here’s the introduction note by IIAS…

Lately we are most often being asked about  the recent Holcim-Ambuja-ACC restructuring: Given that the deal math is reasonable, why do we repeatedly ask shareholders to vote against the transaction? 

Our view is based on two questions we  asked when the deal was announced:

• The transaction enables Holcim to pocket Rs 35.0 bn, increase its shareholding in Ambuja (- and conversely dilute minority investors by 21%) and retain their full voting rights in ACC. Given their stewardship of Ambuja and ACC,  does Holcim deserve money for nothing (- and the shares for free)?
• Do the Rs. 9.0 bn of synergies really exist?

Our answer to both these questions is an emphatic no.

Ambuja and ACC’s operational and financial performance both, is noticeably different – and significantly weaker from that under the previous management. And if a board fiat is all it takes, then it is not clear why Holcim failed to extract the Rs 9.0  bn of annual synergies, earlier. A full merger between Ambuja and ACC is the answer -  but leaves the cash with Ambuja, and not directly in Hocim’s hands.

The deal is analysed in detail in the attached note (Institutional EYE Holcim-Ambuja-ACC: Unlocking synergies. Really?) and the accompanying presentation.

Disclaimer: The information/opinions expressed in this report/newsletter are those of the author. This website has not verified the accuracy of the claims made in the report/newsletter, nor does it agree or disagree with, or endorse any information/opinions contained therein.

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