India's Adani group will exit the consumer goods joint venture with Singapore's Wilmar International in a deal valued at $2 billion as the Indian conglomerate focuses on core infrastructure business.
Flagship company Adani Enterprises will sell a 13% stake in Adani Wilmar in an offer for sale, which makes the Fortune brand of sunflower oil, to comply with India's minimum public shareholding requirements. Public shareholders already own about a 12% stake in the company.
Singapore's Wilmar, one of Asia's agribusiness giants, will acquire Adani's remaining 31% stake at a price not exceeding 305 rupees per share, according to the statement.
The price is a 7.2% discount to Monday's close and values the portion being sold to Wilmar at $1.44 billion.
The divestment comes a month after U.S. authorities accused founder Gautam Adani and some top executives of being part of a scheme to pay bribes worth $265 million to secure Indian power supply contracts. The Adani group has called the charges "baseless".
The proceeds from the sale will be used to boost growth in the core infrastructure platforms, the company said.
The conglomerate, which is present in segments such as renewable energy, coal, airports, defence, aerospace and cement among others, has already committed investments worth billions of dollars in these areas.
The deal will be funded from internal sources and bank borrowings, Wilmar said in a separate statement, adding that it will explore opportunities to bring in "strategic investors" for the company, set up in 1999.
The Indian subcontinent, including Bangladesh, Sri Lanka, and Pakistan, offers "tremendous growth potential" for the agri-food businesses, Wilmar said.
"The rural market in India presents significant growth opportunities, and Adani Wilmar is well positioned to capture a substantial market share," it added.
Adani Wilmar, among India's top edible oils and food companies with 24 factories in 15 Indian cities, will be given a new name after the deal.
Adani Enterprises' shares closed nearly 8% higher after the announcement.
Adani Wilmar's shares, which are down about 7.4% this year, closed mostly flat at 328.75 rupees.
