Adani to Sell 44% Stake in FMCG Company for $2 Billion
MUMBAI: In a significant business move, the Adani Group, headed by Gautam Adani, is set to sell its staples business, Adani Wilmar, to Wilmar International of Singapore for a whopping $2 billion. This strategic deal is expected to bring a substantial cash influx for the Ahmedabad-based conglomerate, addressing its liquidity needs for the core infrastructure business.
The Deal Details
The Adani Group, operating through its key entities Adani Enterprises and Adani Commodities, currently holds a 44% stake in Adani Wilmar, which boasts popular brands like Fortune sunflower oil and Kohinoor basmati rice. As part of the agreement, Wilmar will acquire 31% of this stake at Rs 305 per share, effectively increasing its ownership in Adani Wilmar from 44% to 75%. The transaction is valued at $1.4 billion, representing a 7.2% discount to the previous day’s closing price.
Under Indian regulations, public shareholders must maintain a minimum ownership of 25%, limiting the promoters’ share to 75%. Consequently, the remaining 13% stake will be offered to the public through an offer for sale, with current public ownership standing at 12%. This move marks the end of the Adani Group’s 25-year presence in the staples sector.
Key Personnel Changes
In light of this development, Pranav Adani, the nephew of Gautam Adani, and Malay Mahadevia, a childhood friend, have stepped down from Adani Wilmar’s board. Following the completion of the deal, the company is slated to undergo a rebranding, choosing from names like AWL, AWL Agri Business, or Fortune Agri Business.
The Road Ahead
This divestment comes on the heels of recent scrutiny faced by Gautam Adani, with US authorities alleging his involvement in a $265 million bribery scandal related to Indian power contracts, a claim vehemently denied by the Adani Group. The proceeds from the sale of Adani Wilmar are earmarked to fuel growth in the group’s primary infrastructure operations, following the earlier sale of its financial services arm to Bain Capital.
As the Adani Group charts a new course with this sale, it remains to be seen how this strategic realignment will shape the future trajectory of one of India’s leading conglomerates. How will this move impact the group’s existing businesses and future ventures? Only time will tell.
