Billionare Adani To Exit From Wilmar JV In $2 Bln Deal; Stocks Down

(RTTNews) - Indian billionaire Gautam Adani's conglomerate is exiting from its food FMCG joint venture, Adani Wilmar Ltd., with its Singaporean JV partner Wilmar International Ltd. in a deal, which is reportedly worth $2 billion. Shares of Adani Enterprises Limited or AEL dropped around 3 percent in Indian trading after it agreed to sell its entire 44 percent stake in the JV in a multi-phased deal.

Adani Wilmar shares also were down 6.5 percent on the Bombay Stock Exchange, and 6.3 percent on the National Stock Exchange. Adani Wilmar had a market capitalization of INR 42,785 crores or $5.0 billion as on December 27.

The move follows the Adani Group's plan to focus on its core infrastructure businesses. The company expects to use the proceeds from the sale to turbocharge its investments in the core infrastructure platforms in energy & utility, transport & logistics, and other adjacencies in primary industry.

AEL said it plans to continue to invest in infrastructure sectors so as to further strengthen its position as a major incubator of platforms in India.

AWL, India's largest edible oils and food FMCG company, has 24 factories in 15 cities and a strong distribution network of more than 10,000 distributors. AWL also exports to over 30 countries globally.

In a statement, AEL said it will sell around 13 percent in Adani Wilmar to achieve minimum public shareholding requirements, while Wilmar International has agreed to acquire around 31 percent stake in the JV.

AEL, its unit Adani Commodities LLP and Wilmar International's unit Lence Pte. Ltd. have entered into the deal. Lence will acquire all the paid-up equity shares of Adani Wilmar held by Adani Commodities as at the date of exercise of the call option or put option, as the case may be, in respect of a maximum of 31.06 percent of the existing paid-up equity share capital of AWL.

Further, Wilmar, in its statement, announced that in the deal to buy up to a maximum of 403,739,517 equity shares of Adani Wilmar, option price per equity share will be mutually agreed upon by the parties, subject to a maximum price of INR305.

Adani Commodities and Lence each currently own 571.02 million equity shares of AWL, each representing 43.94 percent of the existing paid-up equity share capital, aggregating to 87.87 percent of the equity shares. The balance of 12.13 percent equity shares in AWL is held by public shareholders.

As per the Securities and Exchange Board of India, AWL is required to maintain a minimum public shareholding of 25 percent.

The sale is subject to customary condition precedents including receipt of applicable regulatory approvals.

Following the sale, Adani's nominee directors will step down from the Board of Adani Wilmar, and its name will be changed.

The planned capital raise comes after the United States recently indicted Adani Group founder Gautam Adani and a few other top executives for their alleged roles in a five years-long, multi-billion-dollar bribery and fraud scheme involving plans to develop a lucrative solar power plant.

Though the Adani Group denied allegations made by the U.S. SEC and the US Department of Justice, the stock value of Adani group's listed companies then had fell significantly.