WILMAR International announced on Monday (Dec 30) that it will acquire Indian multinational conglomerate Adani Group’s remaining stake in Adani Wilmar, a consumer goods joint venture between both groups, for 123.14 billion rupees (S$2 billion).
Wilmar’s wholly owned subsidiary Lence has entered into an agreement with Adani Commodities for an option to acquire its 31.06 per cent stake in Adani Wilmar at a price not exceeding 305 rupees a share.
Adani Enterprises, the flagship company of Indian multinational conglomerate Adani Group, will sell the remaining 13 per cent stake in Adani Wilmar to comply with India’s minimum public shareholding requirements. Adani Commodities is under Adani Enterprises. (*see amendment note)
Currently, Adani Commodities and Lence each own 43.94 per cent of Adani Wilmar’s existing paid-up equity share capital, aggregating to 87.87 per cent of the equity shares. The remaining 12.13 per cent of the equity shares in Adani Wilmar is held by public shareholders. (Under the regulations of the Securities and Exchange Board of India, Adani Wilmar is required to maintain a minimum public shareholding of 25 per cent.)
Following Lence’s acquisition of the shares, Adani Wilmar would become a subsidiary of Wilmar, with the transaction being funded from internal sources and bank borrowings. Wilmar plans to bring in strategic investors to facilitate Adani Wilmar’s growth.
Explaining its rationale for the move, Wilmar noted Adani Wilmar’s position as India’s largest edible oils and food fast-moving consumer goods company, with operations in 15 cities, a distribution network of more than 10,000 distributors and 720,000 retail outlets across India. The company also exports to over 30 countries globally.
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Second, Wilmar – noting India’s population of 1.42 billion, median age of 28.4 years and strong gross domestic product growth of 7 per cent – sees “tremendous growth potential” for the group’s agri-food businesses on the Indian subcontinent, which includes Bangladesh, Sri Lanka and Pakistan.
Adani Wilmar also currently holds a dominant position in India’s fast-consumer moving goods market and offers a full range of oil, rice, flour and other Indian food products.
Third, Wilmar sees significant growth opportunities in the rural market in India, adding: “Adani Wilmar is well-positioned to capture a substantial market share by leveraging Wilmar’s global operations and distribution network.”
Fourth, Adani Wilmar’s leading brand, Fortune, is widely-recognised by consumers in India. “As India grows in wealth and sophistication, the demand for Adani Wilmar’s branded staple consumer foods will increase in both quantity and quality,” said Wilmar.
Fifth, Adani exports products such as rice, castor oil and oleo chemicals to over 30 countries – products which Wilmar noted are important commodities in its global trades. Having a strong presence in India will enable Wilmar to source better and improve trade flows into its global network, the group said.
Assuming the transaction is completed at the price of 305 rupees a share, Wilmar will recognise a gain on deemed disposal of an associated company of US$1.48 billion, with a corresponding increase in net assets of approximately US$1.57 billion.
Based on the unaudited financial statements of Adani Wilmar as at Sep 30, 2024, the group will thus recognise a negative net tangible assets attributable to Adani Wilmar of about US$1.12 billion.
Shares of Wilmar International closed S$3.09 on Monday, up S$0.02 or 0.7 per cent, before the announcement.
*Amendment note: A previous version of the story incorrectly stated that Adani Group would sell a 13 per cent stake in Adani Wilmar. The correct figure is 31 per cent. Adani Enterprises will sell its remaining 13 per cent stake in Adani Wilmar to comply with India’s minimum public shareholding requirements.
