Adani’s Company has planned to acquire an amount of Rs 7,017 crore of DB power which collapsed on Wednesday. This decision has been taken by the company as the deadline to complete the transaction has already expired.
The development comes as Gautam Adani's conglomerate reviews capital expenditure plans got triggered by a scathing report by the US-based Hindenburg Research on January 24.
Adani Power had signed a purchase agreement for DB Power on August 18, 2022, and planned to conclude the deal by October 31, 2022.
The deadline was repeatedly extended.
DB Power owns a 1,200-megawatt coal-fired power plant in Janjgir Champa, Chhattisgarh, and its enterprise value including debt was estimated at Rs 7,017 crore.
The planned bid by the company to earn the DB power had been approved by India’s competition regulator last year on September 29.
Nevertheless, the deadline to complete the transaction was extended four times, with the final closing date as February 15, 2023.
On Wednesday, Adani Power informed stock exchanges that the closing date (long stop date in M&A parlance) to complete the DB Power acquisition had "expired".
The collapse of the transaction is a hitch to the Adani Group, which has been dramatically expanding its prevalence across the country.
When the DB deal was announced in 2022, it was Adani's second biggest M&A in the electricity sector after SB Energy India for which he had shelled out some Rs 26,000 crore in 2021.
The newest development shows how the apples-to-airport conglomerate is prioritising its financial health over aggressive growth.
It is strengthening its balance sheet by retiring debt, recovering pledged shares and conserving cash as it attempts to calm investors spooked by Hindenburg's report on its business practices.
Adani Power, with 13.6GW capacity across seven thermal assets in five states and a 40MW solar asset, had a debt of Rs 36,031 crore as on September 30, 2022.