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United Phosphorus (UPL), a leading producer of crop protection and specialty chemicals, has acquired 50 per cent stake in Sipcam Isagro Brazil (SIB) from Isagro SpA for an undisclosed sum.
SIB was an equal venture between Sipcam-Oxon group (Sipcam) and Isagro, which will now exit the joint venture by offloading its stake to UPL. The transaction is expected to close within a month. YES Bank was the advisor to UPL for the transaction.
SIB produces and distributes agrochemicals with a formulation plant in Brazil with capabilities in various formulation types for crop protection products.
Mr Jai Shroff, CEO, UPL, said with a potential market of $7 billion, Brazil ranks among the top five largest global crop protection markets.
“Given the high entry barriers this market enjoys and UPL's limited presence locally, SIB represents a unique opportunity to kick-start operations on a larger scale,” he added.
Established in 1969, UPL has interests in seeds, crop protection and post-harvest activity. The product range includes insecticides, fungicides, herbicides, fumigants and rodenticides. It has customer base in 86 countries and ranks among the world's top five post-patent agrochemical manufacturers.
India meets 85 per cent of its urea requirement through indigenous production, but is largely dependent on imports for meeting the phosphorus and potassium requirements. It is imported either as finished fertiliser or raw material.
The deal is the third acquisition of UPL in this fiscal, following the acquisition of the global Mancozeb business and the brand Manzate from DuPont in June 2010 and RiceCo LLC, US, in December 2010.
On a consolidated basis, UPL had cash reserves of Rs 2,904 crore as of March 2010. The company's revenue in the last fiscal was Rs 5,300 crore.
With no details on the deal size and valuation, the investors seem displeased with the acquisition. Shares of United Phosphorous and its group firm Advanta India, which is into the seeds business, were down four per cent each at Rs 136 and Rs 317, respectively, on Monday.
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