Business Daily from THE HINDU group of publications
Thursday, Jun 22, 2006
Business Daily from THE HINDU group of publications Thursday, Jun 22, 2006 |
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Corporate
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Mergers & Acquisitions GHCL set to buy soda ash unit in Romania for $24 m Jayanta Mallick
After the acquisition, the company would become the only manufacturer of synthetic soda ash in Romania and gain access to the eastern and central European markets.
Kolkata , June 21 GHCL Ltd is set to acquire a 2nd loss-making synthetic soda ash unit in Romania next month for around $24 million. However, unlike the first one — SC Bega Upsom SA — the proposed acquisition is not that of a privately held company. The company is also in talks with two US-based natural soda ash companies for an early acquisition. Mr Sanjay Dalmia, Chairman, told Business Line on Wednesday that the acquisition of a 3-lakh-tonne-plusper annum unit, currently being run by a Romanian Government agency, would be made through a deferred payment plan. "We hope to acquire the unit in July. The in-principle agreement we have struck with the government agency entails immediate change-over of management control in favour of GHCL, operational turnaround within one-year timeframe from the time of actual acquisition, no payment for the first year, a long-term staggered payment schedule and increase in capacity by another one lakh tpa in the first year after acquisition," Mr Dalmia said. He said the acquisition would finally cost the company roughly 20 per cent more than the previous one. SC Bega Upsom was acquired in December 2005 at $19.5 million. According to sources close to the deal, the staggered payment would stretch for five years. After the acquisition, the company would become the only manufacturer of synthetic soda ash in Romania and gain access to the eastern and central European markets. After closure of capacities in Austria and Bosnia, the region's current soda ash capacities - in Bulgaria, Poland and Germany - are evenly balanced and lower than the projected demand growth. Romania, which is scheduled to join the European Union in 2007, may also provide further market access to GHCL.
US acquisition
Mr Dalmia also confirmed that the company was negotiating with Wyoming-based natural soda ash manufacturers. "We propose to acquire one of them," he said. According to global fund sources, a private equity firm, which bought out the controlling stake in one Wyoming soda ash producer some three years ago, is planning to sell off to GHCL. However, the sources pointed out that after the recent hardening of natural soda ash in the international markets, the price for the stake has been marked up delaying the conclusion of the deal. With a minor exception in Kenya, natural soda ash is produced only in the US and has a premium market worldwide. If successful in acquiring the US unit, GHCL would be a member of prime league in the global industrial chemical markets. The GHCL Chairman said that the company's $40 million deal for acquisition of Roseby's, UK's largest home textiles retail chain, would be through in July.
More Stories on : Mergers & Acquisitions | Chemicals
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