Adani Power’s proposed acquisition of DB Power Ltd’s thermal power assets has fallen through since the transaction’s deadline has passed. In this article, we will look at the reasons behind the deal’s demise as well as the background of the firms involved.
The Transaction’s History
Adani Power announced its intention to buy DB Power in August 2022, which operates a 2×600 MW thermal power plant in Chhattisgarh’s district Janjgir Champa. DB Power has long and medium-term power purchase agreements in place for 923.5 MW of capacity, which is backed up by fuel supply agreements with Coal India Ltd, and its facilities are profitable. DB Power’s turnover during the previous three fiscal years has been 3,488 crores (for FYcrores-22), 2,930 crores (for FY 2020-21), and 3,126 crores (for FY 2019-20), respectively.
The Collapse of the Deal
When the initial deal was signed in August of last year, the timeframe for completing the acquisition of DB Power was extended four times. Adani Power, on the other hand, has recently notified that the lengthy stop date under the memorandum of understanding dated August 18, 2022, has expired without providing any information concerning date extensions or agreement renegotiation. By reporting the expiration of the extended stop date, the Adani Group’s power sector division essentially terminated the acquisition deal.
Hindenburg’s Report
The deal’s demise comes as US-based short seller Hindenburg Research accuses the Adani Group of inappropriate use of offshore tax havens and stock manipulation. The bad report from the Hindenburg has put Adani in trouble, reducing the value of the group’s companies by $120 billion. The corporation has rejected all allegations of misconduct.
Concerning DB Power
DB Power is in the business of constructing, operating and maintaining thermal power plants in Chhattisgarh. It was registered with the Registrar of Companies in Gwalior on October 12, 2006. DB Power’s holding entity is DPPL (Diligent Power Pvt Limited).
Conclusion
Finally, Adani Power’s planned acquisition of DB Power’s thermal power assets has fallen through owing to the expiration of the long stop date, and it remains to be seen if the two firms would renegotiate the deal. The deal’s demise comes at a time when the Adani Group has been accused of inappropriate use of offshore tax havens and stock manipulation, leading to a large drop in the value of the group’s enterprises. Meanwhile, DB Power will continue to economically run its plants and retain its long and medium-term power purchase agreements with Coal India Ltd.
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