To acquire caustic soda business of Trust Chemical Industries
Deal size is estimated at about $200 mChemplast to invest Rs. 1,000 cr. in India
CHENNAI: N. Sankar-led Sanmar Group is the latest to join the growing list of Indian companies on an overseas acquisition binge. The city-based group has initialled an agreement to acquire the caustic soda business of Trust Chemical Industries of Egypt. The unit is located at Port Said Industrial Zone. The deal size is estimated at about $200 million.
Acquisition in Germany
Simultaneously, the group has also entered into a memorandum of understanding (MoU) to pick up 80 per cent stake in an engineering unit in Germany. According to a release from the group, the German outfit is engaged in SG Iron castings and design/machining of auto components. The deal size is placed at Euro 16 million. The German outfit is a privately held company.
The Sanmar group has appointed Ernst & Young to advise it on structuring of the transaction and raising resources to fund the acquisition.
This is the first time that the Sanmar group is going in for an overseas acquisition though it had a joint venture in Singapore, according to its spokesman.
Chairman N. Sankar told The Hindu that it would take 3-6 months for the completion of the Egyptian acquisition. Chemplast Sanmar, he said, had already committed an investment of over Rs. 1,000 crore on a host of initiatives such as installation of a coal-based power plant of 50 MW at Mettur, setting up of a greenfield PVC venture at Cuddalore and conversion of the caustic soda facilities at Mettur to membrane process. It had announced its decision to go in for a rights issue to fund these.
Hence, the group had decided to raise funds outside Chemplast Sanmar to finance the Egyptian acquisition, he added.
Mr. Sankar said the Egyptian facility was a brand new one with low power cost. Mr. Sankar said this was the third caustic soda unit that the group was acquiring. A couple of decades ago, it had acquired Mettur Chemcials. A few years ago, it had bought over the caustic soda unit of the Kotharis.
The Egyptian unit, the release said, had also facilities to make chlorine-based products. The Sanmar group will evaluate the possibility of manufacturing further products at Port Said such as ethylene dichloride and vinyl chloro monomer (VCM) using the chlorine available, it added.