The Hindu Business Line : Tata Chem completes acquisition of General Chemical of US

Global footprint: Mr Homi Khusrokhan (right), Managing Director, Tata Chemicals, with Mr R. Mukundan, Executive Vice-President (Chemicals), at a press conference in Mumbai on Thursday.

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Mumbai, March 27 Tata Chemicals Ltd has completed its over $1-billion acquisition of General Chemical Industrial Products Inc in the US, making it the world’s second largest soda ash company after Solvay.

General Chemicals adds 2.5 million tonnes per annum of natural soda ash to Tata Chemical’s existing capacities, tipping the balance in favour of the less expensive and more environment-friendly natural soda ash. The unique feature of this deal is that more than 60 per cent of Tata Chemical’s capacities would now be from natural soda, insulating it from the downturn in the market, said Mr Homi Khusrokhan, Managing Director.

The acquisition has been funded through a mixture of term financing (ECB) of $500 million and bridge financing (in the US) of $350 million, raising a total of $850 million at competitive rates, he said. There will be no recourse to further equity for this acquisition, he said.

The loan will be arranged by seven banks, said Mr Girish Nadkarni, Tata Chemical’s Vice-President (Finance). They include ABN AMRO, Nova Scotia, Calyon, HSBC, Mizuho Financial Group, Rabobank and Standard Chartered, he said.

The acquisition of General Chemicals takes Tata Chemical’s total global capacity up from around 3 million tonnes to around 5.5 million tonnes of soda ash per annum. Tata Chemicals had in 2005-06 acquired the Brunner Mond Group of Companies that had a presence in the UK, The Netherlands and Kenya.

The US acquisition also gives Tata Chemicals access to two of the lowest cost natural soda ash reserves in the world (Wyoming, US and Magadi, Kenya). With this acquisition, Tata Chemicals now has manufacturing locations in four continents and access to consumers around the world, including new markets it was not earlier in, viz. North America, Latin America and certain markets in the Far East.

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