Adani Power’s Acquisition of DB Power Fails as Deadline Expires

Adani Power's planned acquisition of DB Power has failed as the deadline to complete the transaction expired.

February 16, 2023. By News Bureau

Adani Power's planned acquisition of DB Power has failed as the deadline to complete the transaction expired.

The deal was Adani's second-biggest merger and acquisition (M&A) in the energy sector, after its acquisition of SB Energy India. The enterprise value of the deal was Rs 7,017 crore.

In a filing, Adani Power said that the long-stop date under the Memorandum of Understanding (MoU) had expired. The companies had signed an agreement on August 18, 2022, according to which the initial term of the MoU was till October 31, 2022.

However, on October 31, the deadline was changed by the companies to November 30. On November 30, the deadline was pushed to December 31, and subsequently to January 15 and then February 15.

Adani Power wanted to expand its offerings and operations in the thermal power sector in the state of Chhattisgarh with this acquisition.

DB Power, which is engaged in the business of establishing, operating, and maintaining thermal power generating operations, owns and operates a 2x600 MW thermal power plant at Janjgir Champa district of Chhattisgarh. Diligent Power Private Ltd is the holding company of DB Power.

This development comes after Hindenburg Research released a damning report on the Adani Group, accusing it of stock manipulation and accounting fraud. Adani Power, one of the conglomerate's listed companies, saw its shares dip nearly 50% till the close on Wednesday. The report also prompted the Adani Group to withdraw its Rs 20,000 crore follow-on public offering (FPO) after it was fully subscribed.

The collapse of the Adani-DB Power deal is a setback for Adani's plans to expand its operations in the power sector. The acquisition of DB Power was seen as a crucial move for Adani Power as it would have given the company control over one of the largest private-sector thermal power plants in the country.

The failure of the deal underscores the challenges faced by Indian companies in the M&A space, particularly in the energy sector. With the uncertainty surrounding the sector and the constant changes in policies, companies face significant risks while pursuing M&A opportunities.

While Adani Power has not yet commented on its future plans, the company is likely to explore other opportunities to expand its operations in the power sector. The Adani Group is one of India's largest conglomerates, with interests in a wide range of industries, including energy, infrastructure, and logistics.

Tags: