Tata Chemicals will have a capacity to make 3 million tonnes of soda ash, behind global majors Solvay, which has 7.5 million tonnes capacity, and FMC which produces 5.4 million tonnes.
MUMBAI: In October, when Tata Chemicals Ltd, the country’s largest soda ash maker heard about investors of soda ash maker Brunner Mond Group wanting to cash out, it acted swiftly to put in place its bid before their rivals got a whiff of it.
By sealing the acquisition in the shortest time possible, the consolidated revenues of Tata Chemicals will touch $1 billion, and the company will take the third slot in the pecking order for soda ash makers across the globe.
Tata Chemicals will have a capacity to make 3 million tonnes of soda ash, behind global majors Solvay, which has 7.5 million tonnes capacity, and FMC which produces 5.4 million tonnes.
Returning to the stealth with which it acquired the UK-based soda ash maker, Tata Chemicals, with interests in diverse sectors like soda ash, fertilisers, cement and iodised salt, was keen not to repeat what happened when it bid for the Egyptian Fertilizer Company.
A bidding war ensued as Tata Chemicals raised its bid price for the Egyptian Fertilizer Company to $352 a share (over Rs 15,000 per share) from the $305 it bid earlier, only to lose eventually to rival Egypt Kuwait Holding, which again upped their offer.
“We were clear this time. We didn’t want to get into a bidding war,” said Prasad Menon, managing director, Tata Chemicals.
“When the opportunity came, we moved extremely fast. We did it in two months. We are not going to stand still,” added Menon who returned from the UK after bagging the soda ash maker with plants in the UK, Netherlands and Kenya.
Helping them negotiate the deal was Lazard Ltd, the UK-based investment banker and the company said the entire $113 million acquisition was funded through current cash balances, including funds from its latest convertible bond issue.
Soda ash is one of the key ingredients for making glass and detergents.
The boom in the automobile and construction sectors has pushed soda ash prices by almost $20 per tonne from last year.
The action in the soda ash sector is hotting up. Earlier this month, Gujarat Heavy Chemicals Limited acquired a 65% stake in SC Bega Upsom SA, a leading Romanian soda ash manufacturer for $19.50 million. Post-capacity expansion, Tata Chemicals and Brunner Mond will be able to globally supply 1.5 million tonnes of dense ash, used in the manufacture of float glass, the demand for which is growing significantly.
“I think the industry is very much on the upturn,” says Prasad Menon, who will take a seat on the board of Brunner Mond Group. There is tightness (surge in demand) in the market and the acquisition will unfold more synergies”, says Menon.
Flanked by Homi R Khusrokhan, executive director at Tata Chemicals and R Mukundan, chief operating officer, chemicals business, the managing director was clearly upbeat.
Tata Chemicals plans to acquire the remaining 36.5 % equity of Brunner Mond by making an open offer by January.
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