India's Tata Chemicals Ltd said on Monday its group revenues would touch $1 billion after the acquisition of UK-based soda ash maker Brunner Mond Group.
The acquisition, funded through current cash balances including funds from a recent $150 million convertible bond issue, would make Tata Chemicals the world's third-biggest soda ash maker, the firm's managing director said.
Brussels-based Solvay SA and US-listed FMC Corp are the world's top two producers of soda ash, which is used to make glass, detergent and soap.
Tata Chemicals on Friday said it agreed to buy 63.5 percent of Brunner Mond, which was once part of ICI Plc., from Wayland Investments Ltd and Barclays Bank for $113 million.
"It is a company that has gone through very, very difficult times and 2004 was probably one of the worst years it faced," Managing Director Prasad Menon told a news conference. "We believe it is a very good buy." Menon did not comment on the profitability of the firm but said there was a "strong possibility of a rebound".
Shares in Tata Chemicals, part of the salt-to-software Tata group, fell more than 2 percent to 217.05 rupees in midday trade in a weak Mumbai market They had risen more than 1 percent on Friday on news of the acquisition.
Menon said Tata Chemicals will soon make an offer to Brunner Mond Group's shareholders to acquire the remaining 36.5 percent.
"Our intention is to own 100 percent of it. Let us see what happens to the offer," he said.
If successful, the total cost of the acquisition would be around 7.8-8.0 billion rupees ($155-177 million), Menon said.
Tata Chemicals' soda ash capacity production would total near 3 million tonnes after the acquisition, he said.
Last year, Brunner Mond Group's revenue was about 180 million pounds ($312 million) while its debt was nearly 50 million pounds, Menon said.
Menon said some of the loans would be due for rescheduling by end-2006 and the company planned to reap some interest benefits on them. Currently, the interest rates varied between 1.5 percent and 4.5 percent over Libor, Menon said.
Lazard Capital was the adviser to the deal.