Adani Wilmar will become Wilmar's subsidiary upon completion of the deal

Wilmar International plans to raise its stake in Adani Wilmar (AWL) by buying over a portion of the shares now held by its partner Adani, in this joint venture.

According to Wilmar, it will have the option to pay Adani $1.95 billion, or 305 rupees per share, for the latter's 31.06% stake in AWL. The agreed price represents a discount to AWL's Monday closing price of 328.75 rupees.

Wilmar and Adani now hold 43.94% each in AWL, with the remaining 12.13% of the shares held by other shareholders of the Mumbai-listed company, described as India’s largest and leading edible oils and food FMCG company.

Under the market rules of India, there is a free float floor of 25%. Adani, headed by Indian tycoon Gautam Adani, will sell the required number of Adani Wilmar shares to comply.

According to Wilmar, AWL runs 24 factories in 15 cities, operating a distribution network of more than 10,000 distributors and 0.72 million retail outlets. Besides selling within India, its products - oil, rice, flour, pulses and soy nuggets - are exported to more than 30 other countries. 

In addition, AWL exports products such as castor oil and oleo chemicals. "These are important commodities in Wilmar’s global trades. A strong presence in India will allow Wilmar to source better and have better trade flows into Wilmar’s global network," says Wilmar.

Wilmar says that upon completion of the acquisition, AWL will become a subsidiary. It adds that the exact number of shares to be acquired is to be determined.

"Wilmar will explore other opportunities to bring in strategic investors to participate in AWL's growth story," the company says.

Wilmar shares closed at $3.09 on Dec 30, up 0.65% for the day but down 12.46% year to date.