Swiss building material major Holcim has likely contracted more than $5 billion in exotic derivative contracts with JP Morgan and Standard Chartered as a currency hedge against receivables from the sale of Ambuja Cements and ACC stakes to protect itself from currency volatility, The Economic Times reported citing people familiar with the matter.
These derivative bets, said to be of shorter maturities, will cover the exchange rate risk on more than $5 billion as and when the acquisition is completed after all approvals are obtained, the report said.
Last week, Holcim said its $6.38 billion deal with Asia's richest man Gautam Adani's group is tax-free.
Holcim had on Sunday signed a binding agreement with the Adani Group to sell its business in India -- about a 63 percent stake in Ambuja Cement, which owns a 54.53 stake in ACC (of which 4.48 percent is direct shareholding). ''So, according to our analysis, it is a tax-free transaction,'' Holcim CEO Jan Jenisch said while addressing investors after the deal on Monday.
When asked about the tax implications, he said: ''Never know if any complication arises, but we assume that we will get the 6.4 billion Swiss Francs as net proceeds''.
As per the deal, Adani Group will acquire Holcim's full stake in Ambuja Cement and ACC for CHF (Swiss franc) 6.4 billion ($6.38 billion).
A day after, Adani also made an open offer to acquire a 26 percent stake each in the two listed companies - Ambuja Cements and ACC Ltd -from public shareholders.
The Adani family is routing the deal through Mauritius-based subsidiary Endeavour Trade and Investment, which is promoted by Acropolis Trade and Investment Ltd.