Aditya Birla Group has acquired Sweden-based speciality pulp and bio-refinery company Domsjo Fabriker for about Rs 1,500 crore ($340 million) through its international subsidiaries Thai Rayon Public Company and Indo Bharat Rayon (Indonesia) from a consortium of six individual investors.
Both the international subsidiaries will jointly fund $180 million for the buyout, while $160 million will be raised by them through a special purpose vehicle and the existing debt of $75 million raised by Domsjo Fabriker for expansion of capacity will be maintained on its books.
This is the second acquisition being made by the Aditya Birla Group in less than two days. On Saturday, Aditya Birla Chemicals, a subsidiary of Hindalco Industries, had bought over the Chloro Chemical Division of Kanoria Chemicals and Industries for a cash consideration Rs 830 crore.
Mr Kumar Mangalam Birla, Chairman, Aditya Birla Group, said: “We are always on the look out for backward integration by strengthening key resources needed for our businesses. Our cement business is among the largest users of coal and we are also exploring opportunities to acquire coal mines.”
The Group was tracking the Swedish company over a year, but active discussions started three months ago, culminating in this deal, he added.
Unlike Andhra Pulp and Paper, which was recently taken over by the US-based International Paper Inc, Domsjo Fabriker is into production of dissolving grade pulp that is primarily used in textile segment (viscose staple fibre and viscose filament yarn).
Post-acquisition, the Group will be able to source 80 per cent of its pulp requirement through captive means from the current level of 55 per cent.
About 25 per cent of the Domsjo Fabriker production is used in premium applications such as binding agents for medical products, particularly pharmaceutical tablets and in casings (wraps) for the food industry.
Mr K. K. Maheshwari, Business Head, Pulp and Fibre, said, the company has opted for the organic route to grow its VSF business, while for pulp it will be the inorganic way.
VSF business contributes about 10 per cent of the Aditya Birla Group's turnover. Post acquisition, VSF turnover will increase to $2.7 billion from $2 billion. Aditya Birla Group has lined up investments of Rs 3,150 crore for VSF expansion.