Adani exits edible oil business, conglomerate to sell 43.94 per cent stake in Adani Wilmar
Adani Group plans to exit Adani Wilmar Ltd (AWL) by selling its 43.94% stake, raising nearly $2 billion. Wilmar will acquire a 31.06% stake at ₹305 per share, with Adani selling 12.88% in the market to meet minimum public shareholding requirements. Proceeds will fund Adani Enterprises’ infrastructure investments. AWL will become a Wilmar subsidiary post-transaction.
Adani Group will exit from the edible oil to food company Adani Wilmar Ltd (AWL) by selling its 43.94 per cent stake in part to its joint venture partner Wilmar and to the market, potentially raising close to $2 billion in the process.
While Singapore’s Wilmar is going to buy a 31.06 per cent stake in AWL, which manufactures and markets food products under the ‘Fortune’ brand, at a price not more than ₹305 a share, Adani will sell about a 12.88 per cent stake in the market to achieve minimum public shareholding (MPS) requirement.
Following the conclusion of the transaction, Wilmar will hold 75 per cent of the equity of AWL even as the Singapore entity said it would look for potential investors to participate in the growth story of AWL.
After the agreement between Adani and Wilmar was reached, Pranav V. Adani and Malay Mahadevia, representing Adani Commodities Ltd, a wholly owned subsidiary of Adani Enterprises Ltd, stepped down from AWL.
ACL and Lence Pte, a subsidiary of Wilmar, held 43.94 per cent each in AWL which posted a revenue of ₹49,242 crore and a profit after tax of ₹278.16 crore in 2023-24.
The agreement stipulates that Wilmar will buy the shares only after MPS (25 per cent for a listed entity) compliance is reached. The transaction will take place 12 months from now and have another six months from thereon to conclude the deal even as parties will explore ways to expedite the transaction.
The AWL stock closed flat at ₹329.5 apiece, down by 0.17 per cent. The closing price reflects a 7.4 per cent discount to the maximum price Wilmar agreed to pay.
In contrast, Adani Enterprise stock jumped 7.65 per cent or ₹184.2 per share to close at ₹2,593.45 on the BSE.
Adani, which is embroiled in a bribery scandal that led to indictment by the department of justice of United States, said it would use the proceeds from the sale of AWL shares to ‘turbocharge’ AEL’s investments in the core infrastructure platform in energy and utility, transport and logistics and other related areas.
In a statement, Wilmar said AWL is India’s largest edible oil company with operations comprising 24 factories in 15 cities and a strong distribution network of 10,000 distributors and 7.2 lakh retail outlets.
It will become a subsidiary of Wilmar after conclusion of the deal, which will be funded from internal resources and bank borrowings.
The Indian subcontinent, including Bangladesh, Sri Lanka and Pakistan, offers tremendous growth potential to Wilmar’s agri-food business, it added.
Apart from edible oil, AWL also offers food products such as rice, flour and other Indian food products.
It also exports rice, castor oil and oleochemicals to over 30 countries, which are important commodities in Wilmar’s global trade.
A strong presence in India will allow Wilmar to source better and have better trade flows into Wilmar’s global network.
For the Adani group and AEL in particular, the transaction will add to its kitty thereby giving it more muscle to grow both organically and via acquisitions.
Adani Enterprises had raised $500 million in October.
Other group companies also raised money in recent months.
These include $1 billion by Adani Energy Solutions Ltd, $500 million by Ambuja Cement and $444 million by Adani Green Energy Ltd.
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Source : The Telegraph Online
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