In the biggest deal-ever in the fertiliser sector, Norwegian chemical company Yara International ASA has acquired Tata Chemicals’ Babrala urea plant and distribution business in Uttar Pradesh for $400 million.
The acquisition is on a debt and cash free basis, including normalised net working capital.
The plant has an annual production of 0.7 million tonne ammonia and 1.2 million tonne urea, and generated revenues and EBITDA of respectively $350 million and $35 million in the financial year ended March 31, 2016.
The plant was commissioned in 1994, and is the most-energy efficient plants in India, the company said in a statement.
”This acquisition represents another significant step in our growth strategy, creating an integrated position in the world’s second-largest fertiliser market. India has strong population growth and increasing living standards, and significant potential to improve agricultural productivity,” said Svein Tore Holsether, President and Chief Executive Officer of Yara.
”This well-operated plant and its highly skilled employees will make an excellent addition to Yara’s global production system,” said Holsether.
The agreement is subject to regulatory approvals in India, a process which is expected to take 9-12 months after which closing of the transaction can take place, the company said.
Yara has operated in India since the 1990s, focusing in recent years on premium product sales in the West and South of the country, delivering strong volume growth and margins well above Yara’s average for the region.
”Our growth in India can be further accelerated with this acquisition, creating a larger market footprint for Yara and enabling increased premium product sales in particular. We will place great emphasis on successful integration of the operations, and will put in place an integration team consisting of highly experienced TCL and Yara employees, the latter from both our existing India operations and our regional management,” said Terje Knutsen, SVP and Head of Yara Crop Nutrition.