The Hindu Business Line : Tatas acquire General Chemical of US for $1 b

Scaling up: Mr Homi Khusrokhan (left), MD, Tata Chemicals, and Mr R. Mukundan, Executive Vice-President, at a press conference in Mumbai on Thursday. –

Our Bureau

Mumbai, Jan. 31

After global acquisitions that made it the fifth largest steelmaker and the second largest branded tea bag owner worldwide, the Tata group is now poised to become the second largest soda ash manufacturer in the world.

Tata Chemicals on Thursday said it had signed an agreement to acquire 100 per cent stake in US-based General Chemical Industrial Products Inc for $ 1.005 billion (Rs 4,000 crore).

The acquisition is timely from an Indian viewpoint as the company is picking up US assets at a time when the rupee is strong, said Mr Homi Khusrokhan, Managing Director, TCL, at a news conference on Thursday.

GCIL is a privately held debt-free company with revenues of $ 400 million and a “healthy bottomline,” he said.

Tata Chemicals would be buying out Harbinger Capital Partners, a private equity firm that owns the majority stake in GCIL.

GCIL has a capacity of 2.5 million tones of soda ash, while Tata Chemicals is already at number three position globally (at 3 million tonnes) after its acquisition of the UK-based Brunner Mond in 2005. Analysts said this would clearly pitch Tata Chemicals into the number two position worldwide.

GCIL has access to the world’s largest and most economically recoverable trona ore deposits (which is converted into soda ash) in Wyoming in the US, said Mr Khusrokhan.

After the buy, over 50 per cent of Tata Chemicals’ capacity would be through the natural route, providing both sustainability as well as a natural hedge against the commodity cycle, he said.

As a thumb rule, natural soda ash is more economical and delivers higher margins, said Mr R Mukundan, Executive Vice-President, Chemicals.

Lazard and Standard Chartered Bank were financial advisers to TCL on the transaction.

On picking up a US asset in the backdrop of a slowdown in that country, Mr Mukundan said that soda ash is in the growth phase with worldwide demand for various applications and that margins are picking up.

Forty per cent of TCL’s revenues are from international sales.

The acquisition would be funded through a mixture of equity and debt, said Mr Khusrokhan but declined to give further details.