Fertiliser maker Coromandel International, part of the $3.8-billion Murugappa Group, on Tuesday said it was acquiring 42.22 per cent stake in Gujarat-based crop protection products company, Sabero Organics, for about Rs 250 crore.
Coromandel will make an open offer to acquire another 31 per cent stake from shareholders of Sabero, taking the total deal size to between Rs 400 and Rs 450 crore. It will fund the acquisition entirely from internal accruals.
The company is acquiring the 42.22 per cent promoters' stake in Sabero at Rs 160 a share. Sabero's shares closed the day 10 per cent higher at Rs 97.90 on the BSE.
“We agreed to pay a premium as, after detailed analysis, we concluded that the acquisition will provide us the perfect synergy, putting us amongst the top five or six domestic players in the plant protection products market. It will also give us a new opportunity to strengthen our formulations business,” Mr Kapil Mehan, Managing Director of Coromandel International, told media persons here.
With the acquisition, Coromandel will be competing with major players such as Bayer's and United Phosphorous in the Rs 8,000 crore domestic crop protection products market, which is growing at 10-12 per cent annually. The combined turnover of Coromandel in the plant protection products segment will be Rs 1,000 crore, after the acquisition.
Global market
“More importantly, the acquisition will give us broader access to the $40 billion global market for these products, as Sabero exports about 60 per cent of its production and has four subsidiaries in Brazil, Argentina, Australia and Europe. It also has 240 registrations for its key products in 50 countries,” Mr Mehan said.
Sabero, which produces a variety of fungicides, herbicides, insecticides and speciality chemicals, clocked a turnover of Rs 413 crore last fiscal, with exports contributing Rs 220 crore. It is setting up a Rs 75 crore plant in Dahej for production of Synthetic Pyrethroids that have a strong export potential — the facility is likely to be ready by this fiscal.
“At present, Sabero is operating at about 30 to 40 per cent of its permissible capacity. With the acquisition, we will be able to ramp up capacity faster,” he said.
Coromandel has lined up a capital expenditure programme of Rs 500 crore, including Rs 350 crore, to increase the capacity of its Kakinada plant from 1.6 mt to 2.2 mt by the second quarter of 2012-2013.